Medicaid is the need-based government program that pays for much of the health care for the poor in the United States. Medicaid often ends up paying the costs of nursing home care for middle-class seniors who have descended into poverty as a result of the high costs of such care. For married couples, Medicaid requires a “spend down” of both spouses’ assets before one spouse can qualify for Medicaid support. This Article posits that, unless the law is changed, divorce may well become standard Medicaid planning practice in many circumstances. This will be especially true for middle and upper-middle-class married couples because they have the most to gain from divorce in this context. This Article argues that Medicaid’s approach toward married couples is based on a narrow and outmoded image of marriage. It assumes a marriage where the spouses have enjoyed a long life together, have common intended beneficiaries, have no other person to whom they have an equal or greater commitment, and it assumes a high level of commitment to the institution of marriage itself. This view of marriage tends to not fit the modern landscape where the marriage one inhabits in old age may be of newer vintage and may not include children of the marriage. Added to this is the trend toward the “de-institutionalization” of marriage. The article contends that as marriage becomes less sacred in our society, the utility of divorce as a Medicaid planning strategy will outweigh its moral repugnance. This is especially true because in this context, divorce does not require ending or even substantially changing the day-to-day relationship of the parties. It simply becomes a rational asset protection plan.
The alternative recommended to this developing trend is the disaggregation of marital property for most Medicaid purposes. Thus, instead of requiring the healthy spouse to spend down her or his assets before the unhealthy spouse can qualify for Medicaid assistance as the present law does, the Article recommends that only the assets properly allocable under state law to the unhealthy spouse should be required to be spent down. Similarly, estate recovery should only apply to the assets properly allocable to the deceased person who received the Medicaid assistance during life. This last point is particularly important in light of the apparent trend toward more aggressive estate recovery in some states.
23 Elder L. J. 41 (2015)