Friday, January 10, 2014

Medicaid Puts New "Wrinkle" on Old Topic of Marriage Penalties

I can remember when tax-savvy couples might plan their wedding dates according to the tax impact, and thus there was talk in political circles about the "Marriage Tax Penalty." 

Recently, one of our Elder Law Prof Blog readers wrote to suggest we post articles about the impact of late-in-life marriage on Medicaid eligibility.  Good idea!  Many might assume that a well-drafted prenuptial agreement should preserve a split in retirement savings.  That assumption could well be dangerous -- in the context of Medicaid.  Here are links to a few recent articles, with brief excerpts to whet the appetite for reading more:

Late Life Love (Part II), by Monica Franklin, 49 Tennessee Bar Journal 30 (Feb. 2013):

"When discussing prenuptial agreements and marriage, we need to advise our clients that if one spouse needs Medicaid to pay for long-term care, the assets of both spouses will be considered by the Medicaid agency ([Tennessee] Department of Human Services, DHS). However, if the couple chooses cohabitation, DHS only considers the assets of the disabled partner. This information is crucial for couples considering late-life marriage."

Paying for Long-Term Care in Illinois, by William Siebers and Zach Hasselbaum, 100 Illinois Bar Journal 536 (October 2012), noting that with changes to Medicaid law, effective in Illinois in 2012:

"Eligibility for long-term care assistance will be denied  [in Illinois] if the community spouse or institutionalized spouse refuses to disclose assets during the application process. Prior to this change, a community spouse with separately owned assets held for at least five years could decline to have those assets considered in the application process for the institutionalized spouse.  This scenario commonly arose in second marriage situations. . . . "

Gray Divorce and Remarriage, by William DaSilva and Steven Eisman, 83 New York State Bar Journal 26 (July/August 2011):

"Another growing trend in the practice of elder law -- relating to both matrimonial law and health care planning -- is the use of so-called 'Medicaid divorces.' In fact, the use of Medicaid gifting and Medicaid planning received judicial sanction from New York's highest court in 2000 in [the case of] In re Shah, [95 NY 2d 148 (2000)].  In this type of divorce, the 'spouse in the community' ... stands to lose a lifetime's worth of savings unless a health care plan is devised that provides care for the ill or incapacitated spouse and simultaneously protects the assets of the spouse in the community so that both spouses do not end up impoverished wards of the state.  A prenuptial agreement alone will not defeat a claim of Medicaid."

In my admittedly quick search for articles on the topic of prenuptial agreements and Medicaid, I did not find a comprehensive discussion by academics or law students in an academic law review. Rather, as suggested by the above citations, the articles I found were all state specific, from state bar journals.  Perhaps one of our law school colleagues has a work-in-progress or article to share?  Or, alternatively, perhaps some of our academic readers are looking for a good, comprehensive research topic for the future.

For our lay readers, this is a good opportunity to remind you this Blog is not intended to be a source of legal advice for specific issues.  Of course, we do recommend that you consult with an experienced elder law attorney for state-specific advice!  

http://lawprofessors.typepad.com/elder_law/2014/01/medicaid-puts-a-new-wrinkle-on-the-marriage-penalty.html

Ethical Issues, Health Care/Long Term Care, Medicaid, Property Management, State Statutes/Regulations | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef019b0475252b970d

Listed below are links to weblogs that reference Medicaid Puts New "Wrinkle" on Old Topic of Marriage Penalties:

Comments

Thank you for this post. I wish I could get word out to adult children that some of their parents’ late-life marriages (versus just living together) are done “because of what my children might think.” The children then see the depletion of Mom’s nestegg to pay for new hubby’s nursing home, when he would have qualified for Medicaid if single. Result: nestegg gone, hubby dies, and Mom gets the Medicaid bed. She otherwise might have been able to be private pay for a single-occupant nursing home room for herself when the time came. Best advice: Kids, encourage your love-struck seniors to live together without matrimony! (Also, shame the CCRCs who still require a covenant of marriage before two people can share a unit.)

Posted by: Jennifer Young | Jan 10, 2014 7:36:06 AM

Post a comment