Summary: Many elderly couples are facing a previously unthinkable proposition, should they obtain a Medicaid divorce for financial reasons. This places the elder care attorney in a dilemma. Should the attorney recommend a “Medicaid Divorce” solely for financial reasons?
Many elderly couples are facing a previously unthinkable proposition, should they obtain a Medicaid divorce for financial reasons. With longer lifetimes, there is a good chance that at least one partner will spend at least a few years in a nursing home. With the baby boomer generation approaching retirement age, more and more of couples will fall into this category. This places the elder care attorney in a dilemma. Should the attorney recommend a “Medicaid Divorce” solely for financial reasons?
Consider the Medicaid attorney with a couple who has come to him for advice. The Wife has suffered a series of strokes and the husband can no longer physically care for her at home. She has to be moved her into a facility where there is a staff that can properly care for her on a 24 hour basis. Initially, her care can be paid out of their assets but, unless she can qualify for Medicaid, their assets will eventually be depleted leaving the husband destitute.
Medicaid is the government program for medical and long-term care expenses for individuals after they have exhausted their available funds. However, Medicaid looks at the assets of both a husband and wife if either of them needs to apply for Medicaid. This is so that the one spouse cannot transfer all assets to the healthy spouse (called the community spouse) and then qualify for Medicaid.
The couple considering a Medicaid divorce has a paid for home worth $200,000, savings of $600,000 and Social Security benefits. In order for the wife to qualify for Medicaid, their $500,000 of savings must be spent down to $66,480.00 (for 2012). This is the maximum amount South Carolina will allow the husband to retain as his own. Although the home is usually not in jeopardy, the remaining 66K in savings and his Social Security may not be enough for his own needs.
In such a situation, a Medicaid Divorce is an option that needs to at least be considered. If they stay married, he can keep the house but if he sells it, he may have to use the proceeds for her care. However, if they obtain a Medicaid divorce and the assets are divided equally, he would keep $300,000 of their savings, a huge difference.
Doctrine of Necessaries
Another potential problem for the healthy spouse is if they live in a state that recognizes the Doctrine of Necessaries. Anderson Memorial Hosp., Inc. v. Hagen, 443 S.E.2d 399, 313 S.C. 497 (S.C.App. 1994) established the following requirements for a creditor pursuing payment from a "liable spouse":
(1) necessaries (usually medical and nursing home expenses) were provided to the spouse;
(2) the person against whom the action is brought was married to the person to whom the necessaries were provided at the time the necessaries were provided; and
(3) despite demand therefor, payment for the necessaries had not been made by the person to whom the necessaries were provided.
A New York Supreme Court case, Wayne Health Care Demay Living Center v. Blair (N.Y. Sup. Court # 68514/2009, April 20, 2011), illustrates how the healthy spouse can unwittingly be liable for financially devastating nursing home bills. Mrs. Blair admitted her husband to a nursing home but didn’t properly handle his Medicaid application. Because Mr. Blair was denied Medicaid, Mrs. Blair was held liable for his nursing home expenses under the doctrine of necessities, a situation that could have been avoided by a Medicaid divorce.
Ethics of a Medicaid Divorce
It is difficult to set aside the emotions involved with divorcing, but should they both become impoverished because of one partner’s health crisis? A Medicaid divorce helps contain the financial damage of a health care crisis. However, if you are considering such a move, you should first consult with aN elder care attorney who is familiar with both the Medicaid rules and the divorce laws. Divorce can have unwanted practical consequences for pensions, Social Security benefits, taxes, insurance, estate law, medical decision-making, even hospital and nursing home visiting rights, among other things. These should all be investigated thoroughly, with the help of an experienced SC attorney, before you take such a serious step as a Medicaid divorce..
Here is a link to a video of a segment from the TODAY SHOW televised on March 13, 2010, on this very topic.
But back to the attorney’s ethical dilemma. The Sunday New York Times Magazine features an advice column called “The Ethicist,” in which a writer named Randy Cohen answers questions of those faced with ethical dilemmas. In response to a Medicaid divorce question, The Ethicist sees nothing unethical about divorcing for this reason. “It is through divorce , paradoxical as it sounds, that you can best honor your marriage vow to cleave to your husband for better or for worse,” Cohen writes. “Preserving your small savings will be enormously beneficial to you both.” For the full text of the New York Times column, go to:
(If you haven''t already signed up for the New York Times Web site, you''ll have to do so first. It''s free.)
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