Federal Medicaid law states that the community spouse can keep all of his or her assets by simply refusing to support the institutionalized spouse. This portion of the law, known as “spousal refusal,” is generally not used extensively except in New York. Under the law, if a spouse refuses to contribute his or her income or resources toward the cost of care of a Medicaid applicant, the Medicaid agency is required to determine the eligibility of the nursing home spouse based solely on his income and resources, as if the community spouse did not exist. In addition, in 2005 a federal appeals court upheld the right of the wife of a Connecticut nursing home resident to refuse to support her husband. The husband was able to qualify for Medicaid coverage, and assets that he had transferred to his wife were not counted in determining his eligibility. Click here for more information.
After awarding Medicaid benefits to the institutionalized spouse, the Medicaid agency then has the option of beginning a legal proceeding to force the community spouse to support the institutionalized spouse. However, this is not always done, and when such cases do go to court, courts in New York generally allow the community spouse to keep enough resources to maintain his or her former standard of living. If the Medicaid agency chooses not to sue the community spouse for support, it can file a claim for reimbursement against the community spouse’s estate following his or her death.