Medicaid pays for many of the costs associated with long-term care. Medicaid is a welfare program. Medicaid is a co-operative program between the federal government and the various states. Typically, the cost of the Medicaid program accounts for 20 to 25% of a state’s overall budget.

So, it is of little surprise that the various States watch the Medicaid program carefully. It should also come as little surprise that the various States attempt to cut corners in the Medicaid program wherever possible.

In the past, I’ve written about numerous ways in which New Jersey fails to comply with federal law governing the Medicaid program. States must comply with the federal law governing the Medicaid program, but the simple truth is, the States, including the state of New Jersey, often fail to comply with federal law governing the Medicaid program.

In a recent federal district court case (in the federal judicial system, a “district court” is a trial court, as opposed to an appellate court or the supreme court), the state of Connecticut was ordered to implement a provision of the federal statute governing the Medicaid program. Although the case involves the state of Connecticut, I thought it would be of interest to my readers because I know for a fact that New Jersey also refuses to implement this same section of the federal law.

In fact, until this recently decided federal court case, the only state that consistently implemented this provision of the federal law was New York.

The provision deals with something called “spousal refusal.” In a nutshell, spousal refusal occurs when the spouse who is not residing in a nursing home (called the “community spouse” in Medicaid parlance) refuses to support the spouse who is living in the nursing home (called the “institutionalized spouse”). If such a refusal does occur and if the institutionalized spouse assigns her right to support from the community spouse to the State, then the State cannot deny the institutionalized spouse Medicaid coverage, despite the fact the community spouse has more assets than the Medicaid program would otherwise allow him to keep.

Stated in English: If the community spouse had $300,000 – which is more money than the community spouse could retain and still have the institutionalized spouse qualify for benefits – and if the community spouse refused to support the institutionalized spouse, then the institutionalized spouse would qualify for Medicaid benefits, assuming that the institutionalized spouse assigned her right to support from the institutionalized spouse to the State. For instance, a married individual has a legal obligation to pay for the necessities of his spouse; if that individual did not pay for those necessities, the institution that provided the necessity (the nursing home, for example) could sue the one spouse for failing to support the other spouse.

In New York, where spousal refusal is pervasive, the community spouse will frequently refuse to support the institutionalized spouse and the community spouse will be able to retain much of the couple’s assets. As I understand it, New York rarely, if ever, sues the community spouse for failing to support his spouse, despite the fact that the institutionalized spouse did – as she must – assigned her right to support from the community spouse to the state.

Obviously, the various States that do not permit this procedure would hate to see this procedure become commonplace. The problem is, like many of the procedures that I employ in planning for Medicaid eligibility for my clients, spousal refusal is part of the very law that is Medicaid.

My guess is, if spousal refusal becomes prevalent in other states, those States will begin to sue the community spouse under the assigned obligation of support. The States will do this in order to deter others from attempting this procedure.