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Good News from the NYS Budget 2012

Spousal Refusal kept Intact

A provision in this year’s budget to end “spousal refusal” was quashed. “Spousal Refusal” is a technique to avoid having a “well” spouses’ assets and income count against an “ill” spouse for Medicaid eligibility purposes. It is a statement to Medicaid that the “well” spouse is unwilling to contribute financially toward the medical costs of “ill” spouse. If “spousal refusal” had been repealed, the change would have necessitated the impoverishment of healthy spouses to make their ill spouses eligible for Medicaid for long term care. Legal scholars speculated that more seniors would have been forced into nursing homes and more seniors would be forced into divorcing their spouses to obtain Medicaid benefits.

Estate Recovery Repealed

This year’s state budget also repealed a provision in last year’s state budget bill allowing the state to recover Medicaid payments from the estates of past Medicaid recipients. Assets that were subject to recovery, but are now outside Medicaid’s estate recovery include joint savings accounts, IRAs, and life estate interests in homes.

What does it mean for you?

The good news is that plans that were put in place years ago are safe. Deed transfers to children with retained life estates executed greater than five years ago are still effective Medicaid plans. The parent retains the right to live in the home, the children’s rights to the home when the parent passes away are also safe, and the life estate interest does not expose the parent to Medicaid claims.

The bad news is that the legislature is proactively attempting to close these techniques down. Prior planning is a must to ensure asset protection and preservation.

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