Joan and Harry were childhood sweethearts and have been happily married for 55 years. Several years ago, Harry was diagnosed with Alzheimer’s disease. Despite Joan’s devotion and care, the disease is progressing, and soon Harry will need to relocate to a memory care unit for more extensive long-term care. After the death of Joan’s father, she received a hefty inheritance and wisely invested it, although with the significant cost of Alzheimer’s care, the money would be spent fairly quickly. Upon much reflection, and a feeling of deserting her husband after a promise to love him “in sickness and in health”, Joan has come to the revelation that divorcing Harry, “on paper”, is the only way to preserve her assets for herself and as an inheritance for their children.
Very simply stated, a Medicaid Divorce is the dissolution of a marriage in which one spouse requires long-term care Medicaid. It is intended to protect assets for the non-applicant spouse, also called the healthy spouse or community spouse. By divorcing, a community spouse may be able to receive a greater portion of the couple’s assets. This not only protects assets for the non-applicant spouse, but it also lowers the countable assets of the applicant spouse. Unfortunately, like in the example above, some couples may feel that this is the only plausible solution when one spouse requires long-term care. This is because without Medicaid assistance, the couple will quickly deplete their assets on long-term care, leaving the non-applicant spouse with little from which to support themself. However, Medicaid Divorce is no longer relevant for the majority of these couples. Furthermore, it generally is not a worthwhile strategy for couples who have less than half a million dollars in assets.
Medicaid Divorce is not relevant for Regular Medicaid, often called Aged, Blind and Disabled (ABD) Medicaid. This is because with ABD Medicaid, although personal care assistance and other supportive services may be provided, extensive and costly long-term care is not covered. Instead, Medicaid Divorce is relevant for couples in which one spouse requires Nursing Home Medicaid (Institutional Medicaid) or home and community based services (HCBS) via a Medicaid Waiver. Supportive services and benefits available via HCBS Waivers are intended to prevent and / or delay the need for nursing home care. This may include in-home personal care assistance, adult day care, assisted living services, adult foster care services, and home health care.
Medicaid Divorce is no longer relevant for the vast majority of couples in most states. California is worth mentioning as it is the only state without an asset limit (eff. 1/1/24). In CA, persons can have unlimited assets and still be eligible for Medicaid (Medi-Cal) benefits.
To start a discussion of Medicaid Divorce, it is important to mention that limited income and assets are required for a senior applicant to be eligible for Medicaid. In 2024, these limits vary by state, but as a general rule of thumb, the income limit for a single applicant requiring long-term care is 300% of the Federal Benefit Rate, $2,829 / month, and the asset limit is $2,000. See financial eligibility criteria by state.
For the purposes of Medicaid Divorce, income is not relevant. When only one spouse of a married couple applies for long-term care Medicaid (Nursing Home Medicaid or a HCBS Medicaid Waiver), only the applicant spouse’s income is calculated towards income-eligibility. Stated differently, the income of the non-applicant spouse is disregarded. More on how Medicaid counts income.
The assets of a married couple are considered to be jointly owned, although the non-applicant spouse of a Nursing Home Medicaid or Medicaid Waiver applicant is able to retain a higher figure. Even so, as a couple, assets might need to be “spent down” in order for the applicant spouse to meet the asset qualification. This can be done by paying off credit card and mortgage debt, making safety and accessibility home modifications, paying out-of-pocket for long-term care, and even going on vacation.
When reducing assets to meet the limit, it is of the utmost importance that assets are not given away, even to charity, or sold for under fair market value. This is due to the 60-month Medicaid Look-Back Rule in which past asset transfers are scrutinized. Note that New York does not currently have a Look-Back Period for long-term home and community based services. However, the state plans to implement a 30-month “look back” sometime in 2025. Violating the Look-Back Period is cause for Medicaid disqualification for a period of time.
Your request has been received. You’ll be contacted within one business day.Right for you? Are you interested in connecting with a Medicaid Expert to discuss whether a divorce is appropriate in your situation and what alternatives exist?