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New York legislature rejects cuts to spousal refusal

The legislature rejects Governor Cuomo's proposal to cut spousal protections, including spousal refusal, in the 2018-19 state budget. The initial New York state budget suggested the removal of spousal refusal, which allows a spouse to refuse payment for long-term care expenses for another spouse.

Under the previous proposal, the only groups eligible for spousal refusal were members of Managed Long Term Care (MLTC) plans, which eliminates many people who need home care or other low-income populations.

However, the current budget keeps spousal refusal intact for the upcoming year.

How does spousal refusal work?

Spousal refusal is a planning option for married couples. Essentially, the option allows a spouse the right to refuse payment for their spouse's care if the spouse is admitted to a nursing home and if the couple fills out forms with Medicaid.

To show how the provision works, here is a standard case example.

Bob and Jane Smith have been married for 20 years, and recently, Jane suffered a massive stroke. She spent several months in a rehabilitation center under Medicaid benefits. Bob decided to sign a spousal refusal and contribute some excess income to the federal guideline of $2,739 per month.

Jane returns home and needs daily home care services, which cost $450 a week. The house also needed renovations to accommodate her injuries. Bob has to pull from his retirement savings and life insurance to cover the additional expenses.

If Bob had reduced to the Medicaid income guideline of $1175 per month, he would not be able to support additional expenses and his family. He might be reduced to admitting his wife to a nursing home or divorcing her. Bob technically met the Medicaid guidelines because of his retirement savings but would risk his livelihood.

It is cases like Bob and Jane's which makes spousal refusal a popular provision, especially as people live longer. However, many politicians argue that spousal refusal is a waste of money for the state, so Gov. Cuomo has proposed cuts to spousal refusal several times over the last five years.

The future remains unclear for the Medicaid plan, but elderly couples can use the planning option through 2019 in New York. If you are not eligible for spousal refusal, check into long-term care insurance or Medicaid Asset Protection Trust to protect your savings.

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