Must both spouses always cooperate when there is a MassHealth Application for one of them?

Join us to learn about when an individual may refuse to cooperate on their spouse’s MassHealth application, and whether that is a good idea. We will be joined by our guest speaker Attorney Jamie Knudson from Knudsen Burbridge, PC. in Wakefield, Massachusetts.

In this webinar we will be covering:

• Is it possible for one spouse to refuse to cooperate on a MassHealth Application?
• In what situations would it be suggestible to not cooperate on a spouse’s MassHealth Application?

The opinions expressed in this webinar are the opinions of Attorney Brian Barreira and Attorney Jamie Knudsen on the law as written as of the date of the webinar recording, March 17, 2022. The information presented in the webinar is for informational purposes only, and is not a substitute for individualized legal advice.

Webinar Transcript

Brian: Let me start by saying, today’s webinar is about whether a spouse needs to cooperate in the MassHealth application process. I’m Brian Barreira, elder law attorney in Plymouth and my friend today, this is Jamie Knudsen. Jamie why don’t you tell us people a little about what you do.

Jamie: All right, yeah, Jamie Knudsen, partner in the firm of Knudsen and Burbridge, we’re located in Wakefield, we’re a firm that focuses on estate and elder law planning as well as I do a fair amount of litigation in the world of trust, estates and Medicaid.

Brian: Okay, so thank you for joining us today. I think with the best place to start is ‘what does a spouse typically do, how does a typical MassHealth application involving a spouse work?’ Typically, and I’ll start and you can jump in, typically they participate in the process. The application leads you to believe you must and there’s a possibility when by the time we’re done here we’ll be saying maybe you should but the spouse has to disclose all assets as part of the process and gets to keep a certain amount of assets. Right now it’s about $130,000, the first $130k belongs to the spouse at home who’s known as the community spouse and then the rest essentially belongs to the institutionalized spouse the way the calculation works. We did have a question from somebody in advance asking, and I’ll just kind of cover it right now, ‘what’s included in that?’ Everything, and if you can get at any assets, if you can get at something, it’s counted. If you have an IRA, doesn’t matter, it’s not your minimum distribution that’s counted it’s everything. If your name is on a joint bank account and it’s your money, that’s in the picture. It’s, everything’s involved here.

Jamie: And I know you know this but just to clarify, right, I mean there are some assets that MassHealth deems as non-countable, a house being a significant one and certainly some other ones, funeral trusts-

Brian: You know and also if you’re still working and you have a 401k, they’ll exempt that because you can’t touch that until you retire typically. So, there are plenty of things that might escape but generally speaking everything’s in the picture so a spouse does participate. Now, what do you do with the extra money if you’re over the magic number of $130K? This is where we’re going to be talking about whether you have to do something, whether you can just keep the assets anyway. But often, people do annuities, they buy an immediate annuity. The problem with that is the state wants you to make them, the state, the beneficiary if you die before getting all the money from your annuity. So, that’s a questionable thing to do if you’re not in good health. Do you get involved in a lot of annuities Jamie?

Jamie: Yes, yeah on that end and right that’s the subject of some litigation, right, at the moment right?

Brian: Right, I was just at the SJC on this and we’ll probably have an answer in the summer I would think. So if you cooperate you’re essentially saying, ‘okay, all my assets are in the picture, all the assets are in the picture’, and then saying, ‘I will surrender them’. That is essentially surrendering your assets to the MassHealth process if you cooperate, but then if you do the right, if you make the right moves you can save most if not all of your assets. So that’s why most people cooperate. Now so the next topic is, ‘what if they refuse to cooperate, what’s the downside? The downside is, if you’re a spouse and your institutionalized spouse, the spouse in the nursing home, is not getting paid for you could get sued personally for not getting your spouse on MassHealth. You’re responsible for that bill potentially. There was a case a few years ago in superior court where a judge took that position and I think it’s the right position, what do you think Jamie?

Jamie: Right, so you’re talking about East Longmeadow?

Brian: Yeah.

Jamie: Yeah. Right, so if a spouse just says, ‘I’m not responsible for my spouse who’s in a nursing home’s bills’ and let’s say MassHealth’s not even an issue, they just say I’m not paying for that. Nursing home, there’s a statute that I believe it’s 209, chapter 209 section 1, I think that two superior courts have ruled that a nursing home can force the spouse to pay those bills. That issue hasn’t gone to the appeals court or anything but it is based on a statute that, at least on its face, appears to give the nursing home that in or out or that I guess that in to bring that type of lawsuit. When you start bringing MassHealth into it right, so there’s some federal and state statutes or regulations that deal with spousal refusal but let’s say ultimately you apply for MassHealth and you get denied. Then the nursing home, so actually while that’s going on I don’t think the nursing home can bring a lawsuit, but after that point if you got denied MassHealth and the nursing home is sitting there and they’re saying, ‘well here’s your bill’, they could try to bring a suit like the case of East Longmeadow Nursing Home versus Wilson.
Brian: I’m not sure they have to wait and I think some of them are pretty aggressive and sue before you get the denial but they can’t evict it’s known as discharge.

Jamie: Right.

Brian: Nursing home discharge but they can’t try to kick you out while you’re going through the process.

Jamie: Exactly, yeah.

Brian: And part of the process is you get a chance if you write a letter right away after getting a denial, after getting a bad decision, you can ask for a re-hearing and that can drag that on for a little longer. But, so a spouse is kind of trapped here if you don’t do anything you’re on the hook. If you just walk away and nobody applies for MassHealth you’re on the hook. So if you want to not cooperate in the MassHealth process you got to be sure that someone else is doing it. That’s really what it comes down to. So, why would you want to not cooperate? Well, maybe you have a large retirement plan and you don’t want to have to buy an annuity with it because it’s all going to be taxable in over a short period of time. Let’s say you have a second piece of real estate somewhere like a vacation home or land. You don’t want to, you may not want to sell it, but you’re limited to a home and $130,000 right now. So if the house, the second house is worth more than $130,000 you’re forced to sell it but if you refuse to cooperate you wouldn’t be required to sell it and those are some of the issues that may lead you to not want to cooperate. All right so the the problem with not cooperating is, the MassHealth rule is they will let you not cooperate but they have to have the right to sue you just like the nursing home could sue you for support of your spouse who’s in the nursing home. The state has to have that right and that’s part of the process here. So that’s one of those things you have to weigh. ‘do I want to be done with this MassHealth process by buying an annuity?’ ‘Am willing to let this hang over my head for a while, that I might get sued?’ Jamie you’ve you’ve dealt with this, it’s a trade-off. Why would anyone want to spend the rest of their life worrying about being sued?

Jamie: Right, and it’s very interesting and for elder law attorneys a frustrating part of the process because there are explicit federal statutes and regulations that say that the nursing home applicant is basically not going to be denied eligibility for MassHealth if their spouse refuses to cooperate. And so it seems like, oh that should be a very straightforward kind of a thing, however MassHealth in recent years, and I think it is important to recognize that I think this is a recent trend, is that they are fighting in any way that they possibly can this idea. And I can quote from a recent fair hearing decision in a case that I handled to explain kind of why that is. But, you know, basically they just don’t like it and as Brian, to back up as Brian mentioned, one of the requirements is that if you’re the nursing home spouse you have to, if you’re competent, if you’re mentally competent, you have to assign your rights to MassHealth to sue your spouse for separate support basically in the probate court. MassHealth I don’t believe has ever actually done that and I guess they just don’t want that responsibility. The way the statutes and regulations read is that that’s what they should do if you know, spouse refuses well they get the right of support and then they should sue the spouse. Seems to sort of make perfect sense but MassHealth has taken the position that, I don’t know sort of that’s too much trouble for us to go through and so we’re going to contest all these spousal refusal instances. I do want unless I’m-

Brian: Keep going, keep going.

Jamie: So one of the things and Brian I think you, I know you do a great service to everybody by posting fair hearing decisions and you know I’ve reviewed all of them right up until 2016 or really, yeah 2016 or so, I think essentially what happened is MassHealth would initially deny, they would deny some cases in cases of spousal refusal but at the fair hearing the hearing officer would uniformly overrule MassHealth’s representative decision. The only case they didn’t do that was the Rosetti versus Waldman case and that actually got overturned by the superior court so it’s only really in the last five or six years and well one of them is a case that I’ve been handling for all that time that they’re saying, ‘well we don’t really believe that the spouse is refusing to cooperate’ or you know or some other reason that they have. So, and I’m just gonna read one thing from their recent, and this really explains the sort of the philosophy behind MassHealth and I think it’s very telling because it’s just not supported by the statutes and regulations it’s just, it’s what they wish the law was. So this is from the fair hearing decision, “the couple’s status as legally married has offered them the opportunity for other financial benefits as well. Including but not limited to those related to social security, Medicare, disability pension plans, individual retirement accounts, inheritance, and health insurance. Marriage comes with many benefits including these financial benefits but also comes with certain obligations including the duty to disclose all financial information when a spouse applies for MassHealth long-term care benefits”. And by the way, one of the other benefits, so that’s a footnote, one of the other benefits was they filed their taxes jointly and so presumably the spouse is getting some benefit by filing a joint tax return and all that. So again, it’s that’s really a completely a policy thing that is not related to the statute itself they’re kind of like well look, you know, you can’t refuse in some things and not refusing other things. You cooperate with your spouse to file tax returns and therefore you must cooperate in every other aspect of your life. Problem is, that’s just not what the statutes or the case laws say.

Brian: Right, they’re making up a new standard that, before they started this you used to be able to just do an affidavit that said ‘I refuse to cooperate. I’m the community spouse, I refuse to cooperate’, you know, you don’t have to say anything more than that. So now they’re saying, well you know, let’s dig into this a little more, like, I had one case that went up to superior court came back down and then they gave spousal refusal to my client. The legal department gave the approval but they said, in the hearing decision, it said well she didn’t resign under the power of attorney until the application date and the daughter is cooperating so it seems like there’s some cooperation within the family. I mean they’re imputing the corporation of the daughter and filing the application as though mom is the one who’s doing it, and they said well you know she was involved in transactions. By the way, I should say in other states such as Florida or New York that this is routinely done and the assets get moved into the name of the spouse down the stretch just before you refuse to cooperate. Now in my case we had some of that in the last year and a half and then they pointed out, well it was the same lawyer involved in moving the assets over me over to mom and then mom’s not cooperating and I’m on both sides here. So if I’m the lawyer, if the same lawyers involved mom must be cooperating. I mean it was it was a jumble of looking for things to say about whether she’s cooperating. She didn’t testify that she refuses to cooperate. Well if you’re refusing to cooperate why would you show up to testify? To some extent they could have said well she showed up to testify so obviously she’s cooperating, but they use the fact that she didn’t testify against her. I mean it’s all silly and you had something similar to that in your case.

Jamie: Well, I mean the interesting thing in my case is that they had been married a long time but they had actually separated their assets for the last 30 years and I won’t you know, I mean for reasons that were you know- so let’s put it this way, they remained married more out of a religious thing than anything else but they lived under the same roof and so MassHealth didn’t think you could, they don’t think you can live under the same roof, even though the community spouse paid, you know, virtually all the expenses, she owned all the assets because she had actually worked and saved her money. So in that case, my case is a little different than yours. Yes they were married a long time, yes they filed joint tax returns but they actually kept everything separate for the last 30 or more years for reasons that are personal to them I guess but I mean it is, it’s part of the record.

Brian: So part of this is MassHealth essentially like warning people, older people don’t get remarried, don’t have a second or third marriage if you want to protect your assets. I mean there are people who legitimately get married, keep their assets separate because mine’s going to my kids yours go to yours and now they’re all commingled. So people have legitimate reasons not to want to cooperate but it’s the genuine refusal that they’re now targeting. Your refusal to cooperate must be genuine, and we don’t know what that is. So, what the law seems to indicate is that you can refuse to cooperate but it doesn’t say what that means. So MassHealth’s position is, you need to at least cooperate so that we know what the assets are that you don’t want to pony up on behalf of your spouse, we at least need to know what they are. They’re pointing to the law, to the state Medicaid manual I think and that because it says assets determined to be available, it’s past tense it almost seems to indicate, I don’t think it’s meant that way in there but they’re reading it that way, that we have to determine what’s there first then you can refuse to cooperate.

Jamie: Yeah if you read some of what they write in their memorandums and things you might be led to believe that the better approach for the non-cooperating spouse would be to provide information on assets but still just refuse to support.

Brian: Right.

Jamie: I don’t know, I am skeptical about whether MassHealth would actually follow through on that but that’s what they try to exploit in our two cases because it was a refusal to provide the information. I still think they would say, I still think they’ll say well your refusal to support your spouse is not genuine and so we’re going to deny it.

Brian: Well they did, but they did approve it in my case, you know we had not provided the all the information, I got a remand, well actually what happened is you know they’re required by law to turn this thing around in 45 days. You file an appeal, you’re supposed to get an answer in 45 days. It took him I think about six months something like that to get from start to finish. So in that time we were debating, you know if we have to appeal it could be years before this community spouse could get on with their life financially, so we decided to buy an annuity. So we provided all the information later and bought an annuity, we went to plan B. So on the on the remand they gave us MassHealth retroactive to the original spousal refusal date. So we did cooperate in that respect on providing the information and then they approved it. So I think there is a path there if you do that. Now their fear, you know they kind of showed their hand a little bit in our discussions, their concern is that they cannot go after the house. The spouse is allowed to have the house the spouse is allowed to have the first $130,000, I don’t think they feel like they can go after that if they’re suing you for spousal refusal, for the excess that you kept. But my client had bought an annuity and they didn’t feel like they could go after the annuity, so that could be part of the strategy here is to refuse to cooperate and annuitize too to do something with the assets so they’re not a sitting duck. So I think that’s where the so-called spousal refusal process might end up.

Jamie: Yeah, but I think that they don’t know, I mean while if you’re refusing to provide the information it seems as if they are still going to take great offense at that.

Brian: So you provide it.

Jamie: Right, no I’m saying maybe that is-

Brian: You know, I mean if you could fight him on that or like you’ve got a case going into the appeals court so maybe you’ll create the path for us, but that’s their position right now. So if you’re gonna provide the, so if you refuse to pay, instead of calling to refuse to cooperate I guess we should call it refuse to pay, so you refuse to pay and then you show them what you’ve done with the assets and you show them that you’ve tied up the assets so that they cannot sue you and get at them and I think that’s probably the path towards spousal refusal. Now I’ve had, by the way I had a denial once the client didn’t want to appeal, just brought the spouse home, where the caseworker handling the the Medicaid application, the MassHealth application treated the transfer of assets from husband to wife as a disqualifying transfer. Now the law clearly says you can move anything between spouses and there’s no penalty but if you’re refusing the theory I guess was if you’re going to refuse to cooperate then you’re not a spouse. It didn’t make any sense, that would have been an easy fair hearing win but the client didn’t want to go forward with that. Have you had any others like this?

Jamie: No but that sounds like what MassHealth would do.

Brian: But I don’t think they, I don’t think they have a chance on that argument because the law clearly says you can move it to your spouse.

Jamie: Right, yeah they would have to, right. I think they would definitely lose on that. They would have to hang their hat on it’s not a genuine refusal to support or cooperate.

Brian: Okay, so all of this, the reason this is important is if this case comes down from the SJC about annuities negatively, and if the state is upheld on on its claim that you have to name the state the beneficiary if you die before getting all your annuity payments, then that’s going to change the dynamic on on annuities. People buy annuities with the excess assets but if there’s a chance that if you die before getting them all if the remaining amounts are going to go to the state to reimburse for your spouse, then I think people are not going to want to do annuities.

Jamie: Right, I think the annuity solution would still be something people would do because there’s still a chance you’re going to outlive, right, especially if you’re a healthy community person, you’re going to likely outlive the annuity payments and for most of these you can get the annuity, you know the payout term to be five years.

Brian: Or, well there’s a company in San Diego that does them for two years so I think what we’ll wind up doing is doing the shortest annuity that you can so that you know you get the money back as fast as you can.

Jamie: Or at least there’s a high likelihood. So I don’t think it totally, again if that case comes out even poorly for MassHealth applicants, I don’t think it’s totally, I don’t think it means that annuity strategy is useless it just means there’s more risk to it.

Brian: Right, so you go short with it but if you have an IRA that you’re annuitizing going short means getting whacked with taxes quickly.

Jamie: Right. Qualified retirement plans are a huge you know problem for for folks.

Brian: Right. All right, any last thoughts we’re almost up we’ve got about a minute left, you know.

Jamie: I don’t think so, it looks like somebody asked, somebody asked a question though in the Q&A.

Brian: Prenups don’t count. So the question is, ‘how does a prenup effect’, they don’t care. If you’re a spouse, you’re a spouse, that’s pretty much it.

Jamie: Although I’ll say this, I think it would right that type of thing would at least help defeat their challenge of the genuineness or authenticity of the the refusal, right?

Brian: Yes. Maybe you put it in your prenup that you expect to claim spousal refusal if there’s a an application.

Jamie: Right.

Brian: But they’re not, if you’re married they disrespect prenups. They also by the way, it’s just in passing, don’t allow alimony to be paid if you’re divorced. So there are a lot, MassHealth has a lot of little rules and you just gotta go in and live with them because that one doesn’t make a lot of sense. But it’s almost better to remain married than to get divorced if you need income from your spouse. Well anyway, that’s off the topic, I’m just filling in the last minute. Thank you Jamie for helping out here, have a good day thank you everybody for attending, bye.

Jamie: Take care, bye.