The meaning of access to a financial account has recently been litigated in New Jersey. In a non-binding decision, the Superior Court of New Jersey disregarded the Medicaid applicant’s argument that she was physically and cognitively unable to access a joint account – ultimately leading to the inclusion of the resources against her for eligibility determination purposes.

Medicaid Basics

Medicaid is a program that makes medical care payments on behalf of the needy. When applying for long-term care benefits, neediness depends upon the applicant’s income and resources – the ability to contribute to the cost of their own care. Which resources are countable vary amongst states.

Establishing Medicaid eligibility requires a substantial amount of information from applicants. Understandably, the government only wants to offer benefits to those that truly need it. However, what if the applicant needs information from a spouse who refuses to give it? Spousal refusal means that a well spouse refuses to contribute his or her income or assets to the care of the institutionalized spouse. Spousal refusal is allowed in New York and Florida, where the states have enacted a version of the federal statute that authorizes it. In Connecticut, spousal refusal was upheld by a federal court in 2005. The New Jersey Division of Medical Assistance and Health Service has a spousal waiver, which is a waiver of the resource assessment in limited circumstances. Namely, there had to have been a break in marital ties before the institutionalized spouse sought Medicaid; or, there could have been an unverifiable death or divorce of the community spouse; or the community spouse’s whereabouts are unknown. In a recent case, the Superior Court of New Jersey considers an applicant’s spousal waiver in the absence of these pre-determined events.

There are many ways to approach Medicaid eligibility: spending down assets, exempt transfers, the creation of certain trusts, and general proactive planning before the look-back period. Some tactics, however, may not be as effective as they once were.

Illinois Divorce Penalty

In a recent, non-binding Illinois opinion, a man was penalized for transferring assets to his ex-wife via a divorce agreement. Harold was 76 years old when he entered long-term care due to Parkinson’s disease. Four months after entering the care facility, he divorced his wife of 50 years. As outlined in the settlement agreement, he kept his pension, Social Security benefits, and $123,000 cash and other assets. His ex-wife kept her Social Security benefits, $88,000 in cash and other assets, the car, the $325,000 house, and some non-marital property.