Must Both Spouses Always Cooperate When There Is a MassHealth Application for One of Them?

Under Massachusetts law, it is clear that spouses are financially responsible for each other’s necessaries, which would include nursing home care. Under Massachusetts General Laws, Chapter 209, Section 1, “both spouses shall be liable jointly or severally for debts incurred on account of necessaries furnished to either spouse.” In fact, one wife found out the hard way when she applied for MassHealth too late for her husband and wound up getting successfully sued by the nursing home for the $45,243.24 that was still owed for her husband’s care; see Are You Personally Responsible for Your Spouse’s Nursing Home Bills in Massachusetts?

When the community (i.e., at home) spouse cooperates with a timely MassHealth application, the community spouse has financial options to preserve assets and income.  One such option (although it should never be the first and only choice that is considered) is the purchase of a single-premium, irrevocable, nonassignable annuity with excess assets (i.e., those assets — other than the principal residence — in excess of the community spouse resource allowance, which is currently $120,900.00 during 2017).

Cooperation with the institutionalized spouse’s MassHealth application is not always in the best interests of the community spouse. What if the community spouse had maintained separate assets from the institutionalized spouse under a prenuptial agreement?  What if the spouses had been legally separated but had not ever filed for divorce?  What if the community spouse does not want to buy an annuity for financial or health reasons?  What if the community spouse has made recent gifts or established a trust and wants to prevent those matters from being considered for the institutionalized spouse’s MassHealth application?  Fortunately for those community  spouses, a process known as “spousal refusal” is an option for a community spouse who does not want to cooperate with the MassHealth application.

There have been nine fair hearing decisions that I have recently found at the Massachusetts Office of Medicaid’s Board of Hearings on the issue of spousal refusal: Appeal 0307174, Appeal 0402108, Appeal 0607185, Appeal 0711322, Appeal 1007332, Appeal 1216920, Appeal 1412045, Appeal 1600586 and Appeal 1601683.  Based on a thorough review of those fair hearing decisions and the current MassHealth regulation at 130 CMR 517.011, it appears that the community spouse must put into writing the refusal to cooperate, then, if the institutionalized spouse is not proved to be incompetent, an assignment by the institutionalized spouse must be made of spousal support rights to the MassHealth agency, which under Massachusetts General Laws, Chapter 118E, Section 1 is the Executive Office of Health and Human Services.  At that point, the community spouse’s assets and income are not considered as part of the application.

Spousal refusal is authorized by federal Medicaid law at 42 U.S.C. s. 1396r-5(c)(3), and is done throughout the nation. The risk of spousal refusal is that the state Medicaid agency could file a lawsuit against the community spouse for support of the institutionalized spouse (and the community spouse then could end up in a much worse position than if an immediate annuity had been purchased), but to my knowledge such a lawsuit has never occurred anywhere.