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plan addresses 'spousal refusal,' nursing-home cost burden
Business & Law Editor
CHAMPAIGN, Ill. —
Spousal refusal, an increasingly popular way for elderly couples to
qualify for Medicaid coverage to avoid nursing-home costs, has been
painted by critics as an abuse of public funds.
But the opposite problem – a healthy spouse facing financial ruin
because of the high costs of nursing care for an ailing mate –
illustrates the complex economic, political and social issues surrounding
spousal refusal and Medicaid, according to an article in the Elder
Law Journal published by the University of Illinois College
Andrew D. Wone, an editor at the journal, noted that “Medicaid-planning
strategies that seek to mitigate the high costs of nursing-home care
have grown in importance” as a growing portion of America’s
elderly struggle to foot the bill for health care.
One of those strategies is spousal refusal under which a healthy husband
or wife refuses to financially support a spouse in order to quality
for Medicaid, the federal program that pays medical costs for low-income
Medicaid pays for nursing homes and other long-term care with fewer
restrictions than Medicare, the federal program for seniors financed
mostly by Social Security funds.
Spousal refusal has been allowed since 1988, when Congress passed the
Medicare Catastrophic Coverage Act to “protect spouses from ‘pauperization’
while preventing financially secure couples from obtaining Medicaid
Although Congress required states to recover Medicaid funds from spouses
able to pay for their mate’s care – or from estates that
had excess funds following the mate’s death – few states
have implemented aggressive recovery programs, according to Wone.
This had led to several widely publicized cases of wealthy couples filing
for Medicaid under spousal refusal and the general perception that the
strategy is a legal dodge that drains public funds away from the truly
The issue is more complicated, according to the Illinois scholar, because
the vast majority of elderly who do file for Medicaid under spousal
refusal do so as a last resort. Proposals to eliminate spousal refusal
altogether would hurt seniors of modest means who may be forced to sell
their family home – or even divorce their institutionalized mates
– to stay financially afloat.
The author proposes a modified form of spousal refusal in which spouses
are required to contribute some portion of income to cover nursing-home
costs. Guidelines could establish mandatory contributions based on a
couple’s combined wealth and limit the use of spousal refusal
“to situations where there is a substantial, documented need based
on a case-by-case analysis,” Wone wrote.
“States would be free to determine the specific contribution percentage,
which would be on a sliding scale based on countable resources and income.
The (healthy) spouse would retain the remainder of the assets and not
be subject to estate recovery until after death, when a state’s
standard Medicaid estate recovery procedures would apply.”
Such a system could establish baseline standards across the nation and
help control costs to taxpayers.
His article is titled, “Don’t Want to Pay for Your Institutionalized
Spouse? The Role of Spousal Refusal and Medicaid in Funding Long-Term