Medicaid has implemented new rules and procedures for Medicaid recipients whose spouse dies, and I fear it will catch some of the most vulnerable off guard. A Medicaid recipient is now required to pursue the spousal elective share of their deceased spouse’s estate. This will be a problem for everyone who doesn’t know about this new rule, but it will be especially hard on those Medicaid recipients who, due to capacity issues like dementia, have no ability to pursue these benefits. It will also put more financial pressure on nursing homes, who may end up having to provide care to these individuals through a penalty period.
What is the spousal elective share? In Kansas, it is roughly half of the entire estate of a couple if they have been married a long time.
The reason the State wants the Medicaid recipient to pursue these benefits is so that the Medicaid recipient will come into money that will pay for their care, relieving Medicaid of the burden of paying for the care. This makes sense. However, requiring the Medicaid recipient to pursue the elective share is no easy task for the recipient. They may have to retain a lawyer, perhaps several lawyers, to pursue the spousal elective share in court. With assets of less than $2,000 and a personal needs allowance of $62 per month, that will be an uphill battle. And, in many instances, the Medicaid recipient may not have the capacity to pursue the elective share in the first place, which means that a conservatorship may be necessary, causing an additional hurdle and expense.
The penalty on the Medicaid recipient who fails to pursue the elective share is harsh. Let’s say Bob has dementia and he is living in a nursing home and his wife, Betty, is taking care of him, but she passes away. Bob was relying on Medicaid to pay for his care. He has less than $2,000 in countable assets. He keeps $62 a month to spend on his personal needs. Betty has $200,000 in the bank. Let’s say this is a second marriage and they both agreed while they were alive that when Betty died, it made more sense for Betty to leave her $200,000 in assets to her children. Let’s say Bob and Betty have been married for 20 years. Under the spousal elective share rules, Bob would have been entitled to roughly $100,000. He gave that right away when they prepared their estate plan and this is what they both wanted.
Medicaid rules now say that because he gave away his right to the spousal elective share, and didn’t fight to receive his spousal elective share, he will have a penalty based on a $100,000 “gift” to Betty’s children. This equates to roughly 20 months of care. For those 20 months, Medicaid simply will not pay.
I am saddened by our State’s lack of empathy and understanding of how their policies impact some of our most vulnerable citizens.