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I could think was, if something hap-
pened to me, there’d be nothing left
and I’d be out on the street.” At the
urging of a financial counselor, she
made an appointment with a respect-
ed elder-law attorney. When he laid
out her options, only one—divorce—
allowed her to get care for her hus-
band and hang on to their remaining
savings. By divorcing Alex, the love
of her life, Roberta would render him
indigent, thus eligible for Medicaid.
R
oberta and Alex are not
alone. Like many older
Americans, they find they
must make gut-wrench-
ing choices—to divorce a
spouse, or to file papers refusing to pay
for an institutionalized spouse, a prac-
tice known as “spousal refusal.”
The two existing national health
insurance programs—Medicare and
Medicaid—have, in part, created the
conditions that have led people to take
these drastic measures. Medicare, the
health insurance program for those 65
and over, was designed largely to treat
acute medical conditions and does not
pay for more than 100 days of skilled
nursing care and rehab therapy.
Medicaid, the health insurance program for the poor, does pay for nursing
home care, but only after an individual
has “spent down” his or her assets—that
is, he or she has depleted all cash assets,
including stocks, except for a nominal
amount, usually $2,000. Spending
down assets by transferring them to
children is not a viable option because
Medicaid looks for gifts the
patient made within the five
years prior to applying
for Medicaid and then
denies coverage for the
number of months the
gift could have paid for
nursing home care.
Transferring assets through a
gift to children must be done five
years before you need care—or
Medicaid will delay its coverage.
AARON GOODMAN
The viable options can be bleak, however. If the patient is married, spending
down assets to qualify for Medicaid often means that the healthy spouse is left
with insufficient assets for his or her
retirement. (The “community spouse”—
the spouse who doesn’t need nursing home care—can keep the couple’s
home but just half their savings.)
“Requiring people who have worked
hard and saved all their lives to become
impoverished before they qualify for
long-term care through Medicaid is
draconian, demeaning, and disempow-ering,” says James Firman, president
and CEO of the National Council on
A look at the numbers reveals just how precarious
the system is. Americans
who live to 65 have a
40 percent chance of
entering a nursing home
during their lifetime. The
Taking care
of a loved one?
Find resources,
tools, and advice at
aarp.org /caregiving.
average stay lasts 2. 5 years and costs
about $175,000. In 2008, the most
recent year for which numbers are
available, 9 million older people required long-term care. That number is
expected to reach 12 million by 2020 as
the boomer population ages. Currently, only about 8 million Americans have
private long-term-care insurance.
Critics of asset transfers point to
the staggering costs of Medicaid—
$333.2 billion in 2007—and maintain
that those who dodge their responsibility to pay for their own long-term
care are gaming the system. But elder
advocates say these practices go on because Medicare and Medicaid haven’t
done enough to support home- and
community-based services. Medicaid, in particular, is overly focused on
nursing home care, with far fewer resources allotted for home care. “
Powerful state nursing home lobbies make
it very difficult to break the institutional bias in Medicaid,” says Firman.
