New York Spousal Refusal

Spousal refusal is a uniquely New York Medicaid planning strategy authorized under New York Social Services Law §366(3). Under this statute, a community spouse may formally refuse to make their assets or income available to pay for the institutionalized spouse's care. When the community spouse executes a written spousal refusal statement, New York Medicaid must evaluate the institutionalized spouse's eligibility based solely on the institutionalized spouse's own assets and income — not on the community spouse's resources. This allows the institutionalized spouse to qualify for Medicaid even if the couple's combined assets significantly exceed the normal Medicaid limits, because the community spouse's assets are simply not considered in the eligibility calculation. The trade-off is that New York State acquires the right to bring a separate legal action against the refusing community spouse to recover the cost of care paid by Medicaid on the institutionalized spouse's behalf under Social Services Law §366-c. However, this recovery action is rarely pursued aggressively, and the refusing spouse can protect themselves from a judgment by subsequently transferring or repositioning assets. Spousal refusal is not available in most states; it is a distinctive feature of New York elder law that provides significantly greater flexibility for married couples than the standard spousal impoverishment rules in most other jurisdictions. Russel Morgan, Esq. has guided hundreds of NYC families through this strategy.

While New York Social Services Law §366-c gives the state the right to bring a legal action against a community spouse who has exercised spousal refusal, in practice the state's pursuit of these recovery actions is limited and inconsistent. New York's Department of Social Services has the legal authority to file an action in Family Court seeking reimbursement from the refusing spouse for Medicaid paid on the institutionalized spouse's behalf. The Family Court has discretion to order reimbursement after evaluating the refusing spouse's financial circumstances — including the spouse's income, assets, needs, and standard of living. Family Court judges consider the community spouse's reasonable living expenses and financial needs in determining any reimbursement amount, which means a community spouse with significant ongoing expenses (New York City housing costs, medical expenses, dependent children) may face a reduced or no reimbursement obligation. Moreover, many families use the time between the spousal refusal and any potential state action to further reposition community spouse assets — through estate planning, gifting programs, or trust strategies — in ways that reduce the assets available to satisfy a state judgment. Russel Morgan, Esq. advises clients on the full spousal refusal strategy, including both the initial refusal documentation and the subsequent protective measures available to the community spouse.

Spousal refusal is most beneficial in crisis planning situations — when a married person is already in or about to enter a nursing home and the couple has not had the opportunity to complete advance Medicaid planning. In these circumstances, standard Medicaid planning tools (Medicaid Asset Protection Trusts, five-year advance transfers) are not available because the 60-month look-back period cannot be satisfied in time. Spousal refusal allows the institutionalized spouse to qualify for Medicaid immediately — without waiting for the couple to spend down assets to the CSRA maximum — by simply removing the community spouse's resources from the eligibility calculation. This is most valuable when the couple's combined assets significantly exceed the CSRA maximum ($148,620) and the couple cannot quickly reduce assets to the eligible level through legitimate means. By contrast, when there is sufficient time for advance planning (five or more years before care is needed), a Medicaid Asset Protection Trust is generally preferable because it eliminates the issue of state recovery actions entirely and provides more comprehensive long-term protection. For married couples in crisis, spousal refusal combined with subsequent community spouse asset planning is often the fastest path to Medicaid eligibility while preserving the maximum amount of the marital estate. Morgan Legal Group evaluates each client's specific situation to determine when spousal refusal is the optimal component of the overall Medicaid strategy.

Executing spousal refusal in New York requires a formal written statement signed by the community spouse, submitted to HRA (for New York City residents) as part of or in conjunction with the Medicaid application for the institutionalized spouse. The written refusal statement must clearly state that the community spouse refuses to make their resources available for the care of the institutionalized spouse and acknowledges that the state of New York has the right to bring a recovery action under Social Services Law §366-c. The statement should be carefully drafted by an attorney to ensure it meets HRA's requirements and is properly documented in the Medicaid application record. In addition to the refusal statement itself, the Medicaid application must still be complete — demonstrating that the institutionalized spouse's own assets and income are within the applicable eligibility limits. The community spouse's assets must be separately documented and excluded from the eligibility calculation. The timing of the refusal statement is important: it should be executed and submitted to HRA before or at the time of application, not as an afterthought. Morgan Legal Group prepares all spousal refusal documentation in conjunction with the complete Medicaid application package, ensuring that both the refusal strategy and the overall application are positioned for approval by HRA's Medicaid program throughout Manhattan, Brooklyn, Queens, the Bronx, and Staten Island.