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 of Law.
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 people.
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 assistance.”
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 needy.
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 Care.”
