What is Medicaid Divorce?

In the past few years, I’ve learned about Medicaid Divorce as a part of my Gray Divorce practice. It’s complicated and sort of rare, but it’s definitely happening, so I thought it would be a good time to introduce this concept during Older Americans Month.

Medicaid divorce is when a marriage ends because one spouse needs long-term care through Medicaid. By divorcing, the couple protects the assets for the healthy spouse, and lowers the amount of assets for the spouse in need, allowing them to qualify for Medicaid support.

It sounds a little shady, but it’s not. It’s a valid and legal way to obtain long-term care for a spouse when there is no other option.

Photo by Esther Ann on Unsplash

Most often, couples turn to Medicaid Divorce when one spouse needs nursing home or community-based services. To qualify for Medicaid, an older adult must have limited income and assets, hence the divorce route. (Financial eligibility differs by state.) While only the applicant’s income is considered in a Medicaid request, the couple’s shared assets are factored in, which can hinder a married couple’s ability to acquire state-paid care for a spouse in need.

in fact, Medicaid reviews 5 years’ worth of assets before deciding whether to award support to an applicant, so if you give away assets, even to a charity, or sell them for a nominal amount to, say, an adult child, you’ll be called on the carpet and denied services.

Medicaid Divorce first became a thing because providing long-term care for a spouse was such a financial burden that it often left the healthy spouse impoverished. While spousal impoverishment laws since 1988 have reduced that possibility somewhat, for couples with significant assets, it can still be a very real threat.

If you’re wondering whether Medicaid Divorce is something you should consider, let me know. I’d love to explore the details with you and see what opportunities lie in wait.