Whether it’s because we are living longer or because divorce has become more prevalent, we are seeing more couples, ages 60 or 70, tie the knot. Many do so unaware of the rights and obligations they inherit should their spouse become ill and require long-term care. If such a case occurs, the financial consequences can be devastating.
According to the US Department of Health and Human Services, at least 70 percent of people over age 65 will require long-term care services at some point in their lives. While second marriages are still popular – with 1 out of 4 Americans age 25 or older having remarried at least once (U.S. Census) – another trend is emerging. The number of cohabitating seniors nearly doubled, jumping from 1.2 million to 2.2 million (2000 and 2008 U.S. Census). In many instances the decision is financially based, with the couple fearing liability for one another’s medical expenses.
In my experience, those who choose to marry late in life generally maintain separate finances and often opt for a pre-nuptial agreement. Unfortunately, when it comes to Medicaid eligibility, the spouse is still considered a “legally responsible relative” even if all finances were kept separate. His or her assets and income will be counted and deemed available for Medicaid nursing home or home care purposes and must be disclosed.
This news is often compounded by the realization that to qualify for Medicaid, it may be necessary for the applicant to transfer his or her assets to their husband or wife. The well spouse must then execute a “spousal refusal” statement, indicating that he or she refuses to pay their husband or wife’s medical expenses. This statement allows the applicant to become eligible for Medicaid despite the fact their spouse has income and assets above the permitted eligibility levels.
The execution of a “spousal refusal” requires Medicaid to consider only the income and assets of the applicant and not his or her refusing spouse. Both parties must still provide information to Medicaid as to their assets and income. While a spouse’s failure to do so can’t be used against the applicant in determining initial eligibility, an ongoing refusal to provide the requisite financial information will result in a denial of the application.
Once the refusing spouse has executed the “spousal refusal” statement, he or she may be liable to Medicaid for reimbursement of the amounts actually paid for the nursing home or home care costs. While still a substantial sum, this amount is significantly less (often 40-60 percent less) than most nursing homes’ private pay rate, which in Westchester averages from $385.00 to $425.00 per day. After an application filed with a spousal refusal has been approved, there are many post-eligibility planning opportunities that can be implemented to limit the refusing spouse’s exposure to Medicaid’s claims.
While a “spousal refusal” can save a great deal, it does not eliminate the costs altogether. Further complications may arise if assets are transferred and the Medicaid applicant has children from a prior marriage. Sadly, in some cases, these realizations lead to a discussion of divorce. Even in divorce, New York has laws in place that require a separated or divorced spouse to continue supporting a former husband or wife who has become a “public charge” or a victim of extreme hardship.
The decision to marry or remarry late in life is one that should be undertaken after consideration of all the potential consequences. With the significant increase in the numbers of seniors suffering from debilitating illnesses, particular attention should be paid to the feasibility of becoming financially responsible for another’s long-term care.