When planning involves a married couple, in most cases it’s critical to do estate planning for the wife or husband who is well, at the same time Medicaid benefits are being sought for the spouse who is ill. There’s a common misconception that arises in these scenarios, which is vital to understand. It involves a concept called “Spousal Refusal.”

By law, each spouse has an obligation of financial support for the other. This allows Medicaid to require the well or “community” spouse to contribute to the cost of care from available assets. Legally however, Medicaid cannot deny benefits or halt the application process because a husband or wife refuses to monetarily provide for his or her ill spouse. This is why, from an Elder Law planning perspective, a legal document referred to as a “Spousal Refusal” is employed. By signing it and refusing to contribute to your spouse’s care, it permits the application process to continue so that your wife or husband can qualify for benefits. At the same time, it also keeps your assets intact, so that estate planning strategies can be initiated to protect them.

Signing a Spousal Refusal doesn’t mean you’re automatically exempt from economic support of your husband or wife. It just means Medicaid can’t deny benefits to your spouse because you’ve refused support. In these cases, Medicaid will pursue legal remedies to enforce your obligation and recoup the cost of benefits, to the extent possible. Fortunately, with effective estate planning, it’s possible to retain the benefits of a significant portion of your assets, or even all of them if you plan early enough. It is also possible to negotiate with Medicaid in most of these instances, since they’d rather come to a reasonable settlement than initiate legal proceedings. Needless to say, in negotiations with a government agency, you are better off having them handled by experienced Elder Law legal professionals than going at it alone.

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