“Till death do us part” – These words serve as the basis for modern-day marriages. The idea initially was that marriage was a lifelong contract between partners and was only to be broken upon the death of one or both spouses. But what if the best way to save your spouse was to ignore them entirely and seemingly break the “till death” agreement to care for one another?
That is the predicament that many face in the process of qualifying for Medicaid. Spousal Refusal, often called the “just say no” option, is when a spouse of a long-term care Medicaid recipient or applicant refuses to pay the costs associated with the long-term care. Under current Medicaid rules in Florida, an individual cannot be legally denied care if the spouse does not need Medicaid and refuses to contribute towards the costs of care in Florida.
UNDERSTANDING MEDICAID:
Medicaid is the needs-based assistance program for receiving healthcare in the United States. In order to qualify for Medicaid in Florida, the recipient must pass both an income and asset limit test. Suppose an individual has too much stuff (i.e., money in a Checking Account, a stock portfolio, a vacation home, etc.) or makes too much money. In that case, they will not be entitled to receive Medicaid.
As of January 2025, the income limit for Medicaid is $2,901 for an individual, and the individual cannot have more than $2,000 in countable assets. This asset threshold is increased to $3,000 for married couples for the when both need care. If a married couple is applying and only one of the individuals needs Medicaid, the non-applicant spouse can have up to $157,920.
Countable income, for Medicaid planning purposes, includes almost any income from any source – including wages, required minimum distributions, pension, dividends from stocks, and alimony.
Countable assets include almost any asset that is not explicitly excluded, and include stocks, cash, bonds, investments, and any non-homestead real estate. The few types of assets that do not count against someone from Medicaid include personal belongings, up to one automobile (plus additional vehicles if they are over 7 years old), and the applicant’s homestead residence. Florida also allows for required minimum distributions (“RMDs”) not to be considered countable assets – however, they are considered income.
Another caveat is that in Florida, if the Medicaid applicant lives in the home and is not married, then the amount of home equity allowed in the house is $730,000. This means that someone needing Medicaid can’t simply spend millions of dollars buying a nice home and expect to be fully protected.
It can be difficult for individuals to fall below these thresholds, especially the asset ownership threshold – and that is where spousal refusal comes into play.
SPOUSAL REFUSAL OVERVIEW:
Spousal refusal in Florida is a Medicaid asset protection strategy that involves transferring all or almost all of the assets from the spouse needing Medicaid to the spouse who does not need Medicaid. This transfer can occur because spouses can gift assets to each other without any penalties or lookback periods. While spousal refusal deals with the Medicaid law, which is governed federally, it is not currently allowed in most U.S. States. It is currently only an option in Florida, New York, Ohio and Rhode Island.[i]
HOW TO DO A SPOUSAL REFUSAL:
Beginning a spousal refusal starts with moving the assets to the non-applicant spouse (often called the “community spouse”). Because Medicaid allows transfers to spouses without any penalty, this transfer does not violate the 60-month Look-Back Period.
Once the assets have been transferred, the spouse must refuse to use those assets for their spouse’s care. This includes signing a Notice of Spousal Refusal that is sent to the Medicaid agency. Finally, the applicant for Medicaid must sign a “Spousal Refusal Form”. While this Form technically allows Medicaid to sue the non-applicant spouse to recover the money spent on care, many states, including Florida, have never sued a spouse for this.
ALTERNATIVES:
While spousal refusal can be a great option, it is worth considering whether there would be an alternative that is not as drastic. For example, if an applicant for Medicaid is over the asset threshold but only by a small margin, then spending down the assets on various expenses could be an easier way of qualifying for Medicaid. Items that assets can be spent on without violating the Medicaid Look-Back Rule include making home repairs, paying off debt, purchasing an annuity contract, or preparing an Irrevocable Funeral Trust. If you or a loved one falls just over the $2,000, $3,000 or $157,920 asset limit, contact us to learn more about the best ways to spend down and qualify for Medicaid.
If the income threshold is the issue, then a Miller Trust (also known as a Qualified Income Trust) could be a good option. This type of trust allows for money to be moved into a trust held for the Medicaid applicant, but not in a manner that would disqualify them from public benefits. The money is managed by a Trustee (who may not be the person for whom the money is set aside) and can be used for specific purposes, including medical bills, allowances for an individual’s personal needs (currently only up to $160 per month), and other costs associated with medical care or wellness.
CONCLUSION:
While this tactic may not be the best fit for everyone, it is a time-tested strategy that can help afford a high quality of care without eating through a family’s assets. If you want to discuss whether this strategy is right for you, contact a FLORIDA ELDER LAW ATTORNEY today.
[i] https://www.medicaidplanningassistance.org/spousal-refusal/
