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Getting a Spousal Waiver for Medicaid Isn’t as Easy as You May Think in New Jersey

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May 4, 2021 | Blog Post
Jane Fearn-Zimmer

This blog post is intended to help educate your family regarding the limited instances in which a spousal waiver may be available and help guide you through the tedious process of obtaining one in a suitable case. 

The Managed Long Term Services and Supports (MLTSS) Medicaid Program offers valuable benefits, which can provide for long term services and supports in the home, in an assisted living setting or in a nursing home.  However, federal Medicaid law and policy requires the states to evaluate all of the resources available to the Medicaid applicant during the five years immediately preceding the date of filing of the Medicaid application.  This requirement can make it very difficult to obtain a MLTSS approval, particularly if the Medicaid applicant has been separated from a spouse, has a obtained a divorce from bed and board, or has been divorced in the past five years.

Medicaid law and policy provides for Medicaid eligibility as a last resort, requiring the applicant to spend down any excess resources available over the $2,000 countable asset limit.  Under New Jersey common law, spouses can be held liable for necessary expenses (i.e., the cost of medical care) of their spouse and if their assets are in excess of the maximum community spouse reserve allowance (currently set at $130,380), even if the Medicaid applicant has less than $2,000, his or her Medicaid eligibility can be jeopardized by the funds in the name of the healthy spouse. 

Consequently, in determining eligibility for Medicaid, the County Welfare Office (CWO) will ask an applicant’s marital status, and will consider the applicant and his or her spouse legally married until the entry of a final judgment of divorce.  If the CWO determines that you are still married (which can happen even if you have been separated for years or have a divorce from bed and board), it will typically take a “what’s your’s is mine” approach in determining Medicaid eligibility.  This policy is typically enforced by requiring the Medicaid application to provide the spouse or former spouse’s social security number, if the Medicaid applicant has been married at any point during the five year Medicaid lookback period.  The social security number may be used to conduct an asset search, which will probably enable the CWO to identify and consider the current assets of the healthy current or former spouse.   This verification process places the Medicaid applicant in a Catch-22, because banking privacy laws block access to the healthy spouse’s statements, and the healthy spouse is unlikely to spend down assets under his or her sole control for the care of the sick former partner. 

What is spousal refusal? In some other states, especially New York, the strategy of “spousal refusal” is commonly used.  Under this strategy, the healthy spouse refuses to pay the nursing home bills of the spouse applying for Medicaid.  In response, the CWO in “spousal refusal” states evaluates Medicaid eligibility on the basis of the sick spouse’s own assets and income.  This result is referred to as a spousal waiver

New Jersey’s Strict Policy Regarding Spousal Waivers.  For years, the Garden State had a policy against awarding spousal waivers, in all but the most extreme cases, such was where spouses had lived separate and apart for many years.   As a result, spouse waivers were a rarity, making it best to obtain a final judgment of divorce and then wait more than five years to file a Medicaid application. 

How I was able to obtain spousal waiver for one of my recent clients:

In a nut shell, New Jersey was refusing to recognize federal law which provided for spousal refusal. Other states, including NY, do recognize spousal refusal. A little over a year prior to this case, another attorney’s application for a spousal waiver was denied by the New Jersey Department of Human Services, which prompted the case to be taken to the appellate division and the policy against spousal refusal/spousal waivers was overturned. Par for the course, New Jersey was very reluctant to grant the applications.

In my case, the spouses were still married.  The sick spouse was well-educated, extremely bright and conversant. However, their marriage was so difficult that the healthy spouse obtained a domestic violence restraining order against the other spouse, who nine years later became my client.  From that date forward, the two spouses lived separate and apart.  Eventually, one of the spouses needed long term care, and the spousal waiver was obtained largely on the basis of the restraining order.  It was critical to obtain all of that documentation.  Having the spousal waiver meant that the sick spouse was able to get the skilled nursing care needed, without the cooperation of the healthy spouse in the Medicaid application process.

Jane Fearn-Zimmer is a shareholder in the Elder and Disability LawTaxation, and Trusts and Estates Groups. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.

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