Suozzi Calls for Fixing Loophole that Allows Millionaires to Tap into Medicaid

‘Spousal Refusal’ Lets the Rich Shift Burden of Long-Term Care From Spouses to Taxpayers

Mineola, NY - Nassau County Executive Thomas R. Suozzi today called on lawmakers to close a loophole that allows millionaires to tap into Medicaid and shift to taxpayers the financial burden of long-term care for loved ones.

The loophole – called “spousal refusal” – allows one spouse to transfer all assets to the other spouse before receiving nursing home or extended home-care. That spouse then can refuse to pay for the care of their wife or husband, making the “poor” spouse eligible for taxpayer-funded Medicaid.

“I understand that long-term care can be very expensive, but there is absolutely no excuse for those with real wealth – including those who, in some cases, have more than a million dollars in the bank - to saddle taxpayers with that burden,” Suozzi said. “This loophole is yet another example of a Medicaid system rife with waste, fraud and abuse. Medicaid is a vital safety net for our most vulnerable citizens, and we cannot afford to squander it on those who are able to pay their own way.”

During the past three years, Nassau County has filed 49 lawsuits against so-called “community spouses” – the legal term for the spouse that is refusing to pay – in an effort to recover the Medicaid funds. “The Medicaid system in New York is already overburdening taxpayers with ever escalating costs. We cannot afford millionaires on Medicaid,” Suozzi said.

Thirty-nine spouses had assets of more than $500,000 - excluding the value of their homes – including nine individuals with total resources of $1 million or more at the time a Medicaid application was filed. In each case, the spouses declined to pay the cost of caring for their loved ones.

 Only three states – New York, Florida and Connecticut – allow wealthy spouses to invoke the ‘spousal refusal’ clause that effectively forces taxpayers to pick up the tab for long-term care of their loved ones. The 47 other states do not allow the practice.

Under the Suozzi administration, Nassau County has pursued the wealthy spouses to recover Medicaid funds. Since 2003, the county has recovered a total of $2.5 million from spousal refusal cases. Counties do not keep all the money recovered in such lawsuits. In long-term care cases, New York State pays 40 percent of the Medicaid costs, while counties pay 10 percent and the federal government pays the remaining 50 percent of the cost. When a county recovers Medicaid funds from a spousal refusal case, taxpayers benefit at the county, state and federal levels.

Medicaid spending for nursing home care exceeded $17 billion in New York State in 2004, including nearly $500 million for Nassau County residents. Nationwide, the taxpayer-funded Medicaid system spent more than $100 billion on long term care for Medicaid recipients. In New York State, long-care expenses for Medicaid recipients represents 41 percent of all Medicaid spending.

In addition to fixing the loophole that allows for ‘spousal refusal,’ Suozzi urged residents to consider purchasing long-term care insurance to protect them from economic loss in the event they need long term care. The New York State Partnership for Long-Term Care, a special program designed to address this issue, offers basic insurance coverage designed to provide up to three years of nursing home care or six years of home care. For more information, call the New York State Long-Term Care Hotline at 1-888-NYS-PLTC (697-7582).