Spousal Refusal as a Medicaid Planning Strategy: A Radio Interview of Attorney John R. Frazier by Attorney Joseph Pippen
Attorney Pippen:
You’re listening to Ask an Attorney, all about Florida law. I’m Attorney Joe Pippen, a practicing attorney. The law office is open. If you have a question, we have a toll-free number and we have a guest coming up here next, Attorney John Frazier. If you have a Medicaid question, a nursing home, how to protect assets, VA benefit question, John will be on in the next few minutes. So you could also call in and tag in as I talk to Mr. Frazier. So, the toll-free number is 1-800-969-9352. Good morning, John.
Attorney Frazier:
Hey Joe, how you doing today?
Attorney Pippen:
Hey, hey, good morning. So John’s our Medicaid VA attorney with the firm, calls in with Medicaid tip of the week. But if you have a Medicaid question while John’s on, between now and the bottom of the hour, go ahead and give us a call 800. We’ll let John answer your question for you on the VA nursing home benefits. John, what are we talking about today?
Attorney Frazier:
Today, I’m going to talk about a strategy called spousal refusal. Spousal refusal as a Medicaid planning strategy is a very powerful asset, restructuring strategy, that is available. It’s primarily used in Florida and New York, and there may be one or two other states where it’s available. The reason why we need a strategy like this here in Florida is that the average cost of care in a skilled nursing facility is approximately $9,485 per month. Some of these facilities charge up to $17,000 per month. So if you add that up over a year, that’s approaching $200,000. So we have clients who are over the Medicaid asset limit, who need to protect their assets so that they don’t get financially wiped out by the cost of their care.
This is a strategy that only works when you have one spouse applying for Medicaid and one spouse still living in the community, and that person’s called the community spouse. And so the spouse applying for Medicaid here in Florida is only allowed to have $2,000 in countable assets, countable assets, or financial assets like stocks, bonds, bank accounts, things like that. The spouse in the community is only allowed to have $130,380 and the house and the car are going to be exempt. The house is exempt up to $603,000. However, if the spouse or a minor child is living in the house, then there is no asset limit on the Florida homestead.
Let’s say, for example, you have a client or a married couple with a house, a car and $500,000 in countable assets. That’s way too much to apply for Medicaid. So if we’re going to use the spousal refusal strategy, and that’s a fairly typical situation where you have a half a million dollars or over a million dollars in countable assets, the way that this strategy works is that we must bring the Medicaid applicant to less than $2,000. That’s an absolute criteria for this strategy. If the Medicaid applicant applies for Medicaid with over $2,000, the case will not be approved. And there are some very adverse case law contained in a case called Feldman versus The Florida Department of Children and Families. In that situation, the Medicaid applicant was not less than $2,000 at the time of the Medicaid application and the Medicaid case was denied.
So in this fact pattern, let’s say that you’ve got a half a million dollars. So what we would do is we would move, let’s say $499,000 over into the community spouse’s name, leaving with the Medicaid applicant with less than $2,000. Then there are two forms that must be signed before the Medicaid application is filed. Those forms are signed and then filed with the Medicaid application. And if everything is done properly using spousal refusal as a Medicaid planning strategy, Medicaid will be approved.
I’ve done over 3000 Medicaid cases successfully. I’ve never had to take a case to an appeal, but I do not accept every case, every client that calls me, we thoroughly screen our cases. So I’ve used Spousal refusal as a Medicaid planning strategy many, many times. It’s been approved every single time and we’ve gotten a great result in every case. So it’s a very, very powerful strategy. We’re very lucky that we can do this, especially in light of our escalating federal deficit, escalating trillions of dollars now. But right now there’s nothing on the horizon to suggest that the state of Florida is looking to do away with this strategy. So we’re very, very lucky that we have it. So that’s a basic overview of the spousal refusal strategy.
Attorney Pippen:
So John, if a couple of like on the second marriage has a premarital agreement, can the reason for the refusal be based on language in a premarital agreement, you know, we agreed not to have to cover one another’s expenses, medical expenses, if one had to go into a nursing home?
Attorney Frazier:
No. I have researched this before. The state of Florida has something called a Medicaid checklist. And on that Medicaid checklist, it does not require disclosure of a prenuptial or any type of marital agreement because it is unrelated to the Medicaid application process. And these rules apply exactly the same, regardless of a prenuptial or postnuptial agreement. We must have that Medicaid applicant to less than $2,000 before we apply for Medicaid. So that type of agreement is not related to this strategy.
Now we do have some other options where perhaps let’s say that the spouse applying for Medicaid, there could be a variety of reasons. It could be a second, third or fourth marriage, and there could be children from prior marriages. So we can actually restructure the countable assets on the Medicaid applicant’s side without transferring those assets to the community spouse.
Let’s say that we have a half a million dollars that needs to stay on the Medicaid applicant side. Well, that would be a perfect opportunity to use a strategy of a rental property. The rental property strategy, which we spoke about last week. So the Medicaid applicant really, through the power of attorney acting for the Medicaid applicant, can purchase rental property for a half a million dollars. Then also still use that spousal refusal strategy because rental property is exempt and then set that rental property up so that it would be devised to the beneficiaries, his children when he passes away. So that would be a way to incorporate two very, very powerful strategies that we have here in Florida, the spousal refusal strategy and the use of rental property to shelter assets.
Attorney Pippen:
All right. So suppose what would you do if there was a premarital agreement and there were substantial assets in the nursing home spouse’s portfolio, but the nursing home spouse has to go in a nursing home and they have substantial assets. So the refusal doesn’t really come into play unless the other spouse can move those assets to their name. Is that possible?
Attorney Frazier:
Well, we could still use… Let’s say, for example, we have a million dollars. So let’s say that half a million needs to say on the side of the Medicaid applicant. So we could use the rental property shelter to half a million, move the other half a million over to the community spouse’s name, and we could still use spousal refusal in that situation because the state of Florida is going to treat that rental property as a now non-countable asset. It will not count towards his $2,000 asset limit.
Attorney Pippen:
Okay. All right. So you’re listening to attorney John Frazier, discuss Medicaid planning strategies, and it’s kind of a myth that you have to be totally poor to qualify for Medicaid because certain assets can be moved around and repositioned, we’ll call it, to make it beneficial to maximize, saving what you can for your legacy and maximizing total government benefits. And John, give us your contact information.
Attorney Frazier:
The office number is 727-586-3306, extension 104. My cell phone is 727-748-5374. And my email address is john@attypip.com.
Attorney Pippen:
John and I did an hour-long zoom presentation on qualifying for Medicaid and protecting assets. If you’d like the link to that, you can send me an email, I’ll be glad to send it to you. We posted it on YouTube and I have a link I can send you if you’re interested more about asset protection and Medicaid planning. So if you want that, just send me an email to Joe@attypip.com. If you’d like to discuss further with John some Medicaid planning options, you can certainly just call our office, and John, go ahead and give the phone numbers one more time.
Attorney Frazier:
The office number is 727-586-3306, extension 104. And my cell phone is 727-748-5374. And my email address is John@attypip.com.
Attorney Pippen:
All right, John, you have a great Sunday. Thanks for calling in.
Attorney Frazier:
Okay. You too. Thank you.