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Medicaid Divorce: An Overview
Before Medicaid rules changed in 1987, divorce had been used as a planning tool to allow one spouse to qualify for Medicaid assistance and to avoid impoverishing the well spouse. Since recent changes to Medicaid rules in May 2006, the “Medicaid divorce has been resurrected as a planning tool.
The term “Medicaid divorce” may be familiar to some, but unheard-of to others. This article does not attempt to provide a guide as to how a Medicaid divorce should be handled. State law varies greatly in each state's treatment of Medicaid divorces. State law also varies with regard to its handling of Medicaid assistance. A Medicaid divorce should only be handled by those familiar with the applicable state and federal laws.
This article covers some of the issues that should be considered if clients wish to examine the possibility of a Medicaid divorce. A couple will consider a Medicaid divorce because the medical costs of one spouse can force the couple to deplete their assets, leaving the well spouse impoverished. For purposes of this article, the spouse requiring long-term care is referred to as the “Medicaid spouse,” and the other spouse is referred to as the “well spouse.”
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