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State considers end to 'spousal refusal' to pay for nursing home care

Gov. Andrew M. Cuomo delivers his State of

Gov. Andrew M. Cuomo delivers his State of the State address at the Empire State Plaza Convention Center in Albany on Jan. 8. Credit: AP / Hans Pennink

ALBANY — New York is considering ending a practice that allows one spouse to legally refuse to pay for nursing home care for the other — while passing the bill to Medicaid. 

While some see the practice as a scheme benefiting the wealthy, a growing number of advocates for middle-class elderly New Yorkers strongly support it as an essential option to keep a “well” spouse out of poverty when health care costs are exploding.

The last five governors targeted the maneuver, known as "spousal refusal," for repeal 28 times.

New York and Florida are the only states that allow the practice.

But this year, the state Medicaid Redesign Team is considering whether to scrap the decades-old practice, said state budget spokesman Freeman Klopett. Gov. Andrew M. Cuomo appointed the group of health care leaders to cut $2.5 billion from Medicaid, a federal and state health care system.

The team's recommendations for cuts are due by mid-March.

“There are multimillionaires living in skilled nursing in New York State on the taxpayers’ dime,” said Michael McRae, president of St. Ann’s Community elderly housing services.

At last week’s Medicaid Redesign Team hearing in Rochester, McRae urged the MRT to “give political cover” to legislators to eliminate spousal refusal, which has long been protected by the Legislature.

Eligibility for Medicaid is based on family income and wealth and there can be many exemptions and special circumstances.

Generally, a couple in which both are 65 years old or older can have no more than about $38,000 in annual income and assets of no more than about $120,000 if one spouse is to be covered by Medicaid for nursing home care or comparable home care.

Income and assets above those ceilings must be devoted to help pay for such care, which averages more than $10,000 a month in New York.

Spousal refusal allows the “well” spouse to collect more income and to keep more of the couple’s assets under his or her name.

The complex process, filled with loopholes, is further complicated by federal law aimed at protecting more assets to avoid “spousal impoverishment.” The complexity has helped give rise to an entire area of legal practice called elder care. And for nearly 30 years spousal refusal has had enough support in the state Legislature to block attempts at repeal.

But a confluence of factors could make this the year for the major change.

The state has a mandate to cut $2.5 billion from Medicaid in New York, Cuomo has told the Medicaid Redesign Team to consider ending spousal refusal and the team’s recommendations are to be included in the new state budget. 

“The purpose of Medicaid is to help people who financially can’t afford health insurance,” said David Friedfel, director of state studies for the independent Citizens Budget Commission. “Spousal refusal basically provides a way for individuals or families who know how to negotiate the process to get around the requirements … It is unfair.”

How much spousal refusal costs the state isn’t clear.

In 2016, the price was estimated at $10 million. But that doesn't account for the continuing annual costs of each refusal, or increased costs of care as the spouse who entered a nursing home gets older.

In 2013, a congressional oversight committee targeted spousal refusal in its investigation of Medicaid waste and abuse in New York.

The panel said it had “learned that relatively affluent people in New York artificially impoverish themselves in order to qualify for Medicaid and have taxpayers pick up the cost of their long-term care services. At least in Suffolk County … a legal technique called spousal refusal, which is essentially when one spouse abandons all financial care of a sick or disabled spouse and leaves him or her as a ward of the state, is widely used.” 

“One reason New York’s Medicaid costs are so high is that the state makes it too easy for higher income people to qualify when they need long-term care,” said Bill Hammond, director of health policy at the fiscally conservative Empire Center think tank.

“People with means ought to buy long-term care insurance, but the ready availability of Medicaid has crowded out that market," Hammond said. " … The only way to incentivize people to buy long-term care insurance is to make it much harder to game the system. Ending spousal refusal would be a step in that direction.”

Those familiar with the law acknowledge it's an oddity.

State Social Services law says Medicaid coverage “shall be furnished” even though the “applicant has a responsible relative with sufficient income and resources to provide assistance.” The law follows the state constitutional mandate that no one be denied medical care.

Spousal refusal has a growing legion of supporters.

They say the practice helps middle class families contend with skyrocketing health care costs, prevents couples from having to spend their savings and give away assets to qualify for Medicaid and makes it unnecessary to divorce only to protect assets.

Experts cite another benefit: A spouse could enter a nursing home sooner because Medicaid payments will kick in immediately, avoiding the lengthy process of determining eligibility.

The New York City Bar Association and a panel of the state Bar Association strongly oppose eliminating spousal refusal. In a study, the state bar’s elder law panel said without spousal refusal, the cash remaining for everyday expenses for a spouse, “are completely unrealistic for living expenses throughout most of New York state today.”

“We rely on spousal refusal as an important part of eligibility planning for people and in eligibility counseling,” said Valerie J. Bogart, an attorney with the nonprofit New York Legal Assistance Group.

“These are loving couples; they are devoted to each other," Bogart said. "They have been married 50 years and they don’t just readily sign a form that says they refuse to help their spouse … but we say you need to do this to survive.”

“Who can live on this in New York?” she said. “That’s what you’re using to pay your taxes in Nassau. That’s what you’re using to fix your roof.”

Bogart continued, “Are there some millionaires on Medicaid? Probably. Are there people who take advantage of the rules in every part of our system? Yes, that’s human nature. But we see people really struggling with Medicaid. Nobody would go through the hoops they make you go through — and it’s pretty humiliating — if you could afford to do it otherwise.”

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