Spousal Refusal in New York Medicaid: How It Works, Risks, and Recovery

Written by Albert Goodwin, Esq., attorney admitted to practice in New York. Last reviewed 2025. Dollar figures reflect the 2025 New York Medicaid levels and change each January.

Spousal refusal lets a married New Yorker qualify for Medicaid even though the couple, taken together, has far more income and assets than the program allows. The applicant's assets are moved into the other spouse's name. That spouse then signs a written statement refusing to make his or her income and resources available. The local Medicaid district evaluates the application on the applicant's own income and resources alone.

The technique works for nursing home Medicaid and for community Medicaid, which pays for home care through managed long-term care plans and the Consumer Directed Personal Assistance Program. Most of the discussion below uses the nursing home example because the dollar amounts are larger, but the same refusal letter is used in a home care application.

The trade-off is a recovery right. The district may sue the refusing spouse for what Medicaid paid, or file a claim against that spouse's estate later. This page explains the statute, the 2025 figures, the mechanics of the refusal, the recovery exposure, and the planning that usually goes with it.

The Statutory Basis for Spousal Refusal

New York's spousal refusal rests on Social Services Law § 366(3)(a). The statute provides that "medical assistance shall be furnished to applicants in cases where, although such applicant has a responsible relative with sufficient income and resources to provide medical assistance as determined by the regulations of the department, the income or resources of the responsible relative are not available to such applicant." The same subdivision states that the furnishing of assistance creates an implied contract with the responsible relative, and that the district may recover from that relative.

A spouse is a responsible relative under Social Services Law § 101, which makes a spouse liable for the support of the other spouse when that spouse receives public assistance. Family Court Act § 415 gives the district a forum to enforce that liability.

The regulation that budgets income and resources between an institutionalized spouse and a community spouse is 18 NYCRR 360-4.10. It sets out the Community Spouse Resource Allowance (CSRA), the Minimum Monthly Maintenance Needs Allowance (MMMNA), and the treatment of a community spouse who refuses to contribute. Under the regulation, when the community spouse refuses, the district determines the applicant's eligibility on the applicant's own resources and income and reserves its right to seek support from the refusing spouse.

Federal law permits this. Under 42 U.S.C. § 1396r-5(c)(3), an institutionalized spouse may be found eligible despite excess spousal resources if the applicant assigns support rights to the state, if the applicant lacks capacity to assign them, or if denying eligibility would work an undue hardship. In Morenz v. Wilson-Coker, 415 F.3d 230 (2d Cir. 2005), the Second Circuit held that a state must grant eligibility when the applicant assigns support rights and the community spouse refuses to cooperate. That decision binds federal courts in New York, Connecticut, and Vermont.

Few states apply the rule as New York does. New York and Florida are the two states practitioners usually name as routinely accepting spousal refusal, and Connecticut has recognized it since Morenz. Other states follow the federal assignment-of-support path only in narrow circumstances.

2025 New York Medicaid Figures That Matter Here

These are the 2025 levels published by the New York State Department of Health. Confirm the current year's figures before relying on them.

• Resource limit for a single applicant: $32,396.
• Community Spouse Resource Allowance (CSRA): the community spouse may keep resources between $74,820 and $157,920 without a refusal. New York allows the community spouse to keep the greater of $74,820 or one-half of the couple's combined countable resources, capped at $157,920.
• Minimum Monthly Maintenance Needs Allowance (MMMNA): $3,948 per month. If the community spouse's own income is below this figure, part of the institutionalized spouse's income may be diverted to make up the difference.
• Personal needs allowance for a nursing home resident: $50 per month. The rest of the resident's income, after any community spouse allowance and health insurance premiums, is paid to the facility as the resident's share of cost.
• Community Medicaid income limit for a single applicant: $1,800 per month in 2025. Income above that figure can be sheltered in a pooled supplemental needs trust.
• Home equity limit: $1,097,000. The limit does not apply while a spouse lives in the home.

A couple whose combined countable resources are below the CSRA maximum of $157,920 often does not need a spousal refusal at all. The refusal matters when the couple has more than the CSRA allows, or when the community spouse's income is high enough that the district would expect a monthly contribution.

How the Process Works

The steps are the same in New York City and in the counties, with the paperwork differences noted below.

1. Retitle the assets. Joint bank accounts and the applicant's individual accounts are moved to the community spouse's sole name. Brokerage accounts are re-registered. Real property held jointly or in the applicant's name is deeded to the community spouse. Retirement accounts cannot be retitled to a spouse during life, so an IRA or 401(k) owned by the applicant is handled separately, usually by placing it in payout status so that it is treated as income rather than a resource.
2. Bring the applicant below the resource limit. The applicant keeps no more than $32,396 in countable resources. A prepaid irrevocable funeral agreement, a burial plot, and personal effects are exempt and do not count against the limit.
3. File the Medicaid application. The applicant, or an agent under a power of attorney, files with the local district: the Human Resources Administration (HRA) in the five boroughs, or the county Department of Social Services elsewhere. The application discloses the spouse's existence and income.
4. Submit the refusal. The community spouse signs a written statement declaring that he or she refuses to make income and resources available for the applicant's care. It is filed with the application or in response to the district's request for spousal information.
5. Assignment of support rights. The district may ask the applicant to sign an assignment of his or her right to spousal support in favor of the district. This is the mechanism that lets the district later sue the refusing spouse. The applicant does not have to sign if he or she lacks capacity. An agent under a power of attorney with the proper authority can sign, and some districts proceed without a signed assignment because the statute itself creates the implied contract.
6. Approval and budgeting. The district approves the application on the applicant's own figures. In a nursing home case, the applicant's income less the $50 personal needs allowance is paid to the facility each month. Medicaid pays the balance at the facility's Medicaid rate.

Do not transfer assets out of the community spouse's name to children or others before the application is approved. Transfers by either spouse during the 60-month look-back are penalized, and the district reviews both spouses' records.

The Look-Back Does Not Apply to Transfers Between Spouses

Transfers between spouses are exempt from the Medicaid transfer penalty under 42 U.S.C. § 1396p(c)(2)(B)(i) and Social Services Law § 366(5). The 60-month look-back for nursing home Medicaid does not reach them. A couple can move everything to the community spouse the month before the application with no penalty period.

This is what makes spousal refusal a crisis tool. An irrevocable Medicaid asset protection trust needs five years to clear the look-back. A spousal refusal needs weeks.

Transfers to a disabled child, or to a trust solely for the benefit of a disabled child, are also exempt. Families with a disabled adult child sometimes combine a spousal refusal with funding a third-party supplemental needs trust for that child.

New York enacted a 30-month look-back for community Medicaid in 2020, but its implementation has been postponed repeatedly and it was not in effect as of this review. Check the current status before relying on the absence of a home care look-back.

A Worked Example

The figures below are illustrative. Medicaid nursing home rates vary by facility, and the district's recovery claim will be based on what it actually paid.

A husband enters a nursing home in Queens. The couple has $600,000 in countable assets: $450,000 in bank and brokerage accounts in joint names and $150,000 in a CD in the husband's name. The house is in joint names and is exempt because the wife lives there. The husband receives $2,400 per month in Social Security and pension income. The wife receives $600 per month in Social Security.

Without a spousal refusal. The wife may keep the CSRA maximum of $157,920. The husband may keep $32,396. The remaining $409,684 must be spent on care or otherwise planned for before he qualifies. At a private-pay rate of roughly $17,000 per month, that is about two years of self-pay. Because the wife's income of $600 is below the MMMNA of $3,948, she would be entitled to a community spouse income allowance of up to $3,348 from the husband's income once he qualified.

With a spousal refusal. All $600,000 is retitled to the wife except $32,396 left in the husband's name. The wife signs the refusal. The husband qualifies on application. Each month he keeps $50, and the balance of his income is paid to the facility, subject to any community spouse income allowance claimed for the wife. If the facility's Medicaid rate is $12,500 per month and the husband contributes about $2,350, Medicaid pays roughly $10,150 per month.

Recovery exposure. If the husband lives three years in the facility, Medicaid's outlay is roughly $365,000. That is the ceiling on what the district can claim from the wife or her estate under § 366(3)(a). The claim is measured by the Medicaid rate, not the private-pay rate, so the family has already saved the difference between the two for every month of care. Whether the district pursues the full amount, a reduced amount, or nothing depends on the factors discussed below.

The Right of Recovery Against the Refusing Spouse

The district has two paths to recover from a community spouse who refused.

Support action during life. The district can sue the refusing spouse in Supreme Court or Family Court for the cost of assistance furnished. In Commissioner of the Department of Social Services v. Spellman, 243 A.D.2d 45 (1st Dep't 1998), the Appellate Division confirmed that the City could sue a refusing spouse on the implied contract created by § 366(3)(a) for Medicaid paid on the institutionalized spouse's behalf. The First Department reached a similar result in Commissioner of the Department of Social Services v. Fishman, 275 A.D.2d 599 (1st Dep't 2000). In these actions the court looks at the refusing spouse's resources above the CSRA and income above the MMMNA in deciding what the spouse can be made to pay.

Claim against the estate after death. If the refusing spouse dies holding assets, the district may file a claim against that spouse's estate for the same implied-contract debt. This is separate from estate recovery under Social Services Law § 369, which runs against the Medicaid recipient's own estate for benefits received after age 55.

The implied-contract claim is generally treated as subject to the six-year limitations period for contract actions under CPLR 213(2), measured from when each payment was made. Districts that wait years to send a demand may find part of the claim time-barred.

Whether a district pursues recovery during the refusing spouse's life varies. Litigation costs money, the recipient may have died, and the refusing spouse may have spent the assets on legitimate expenses. Many claims surface only after the refusing spouse dies and an estate is opened in Surrogate's Court.

NYC HRA Versus County DSS Practice

The law is the same statewide, but the districts administer it differently, and practice changes over time.

• The refusal document. HRA has its own spousal refusal declaration that it expects to see with the application. Most county districts accept a signed and dated letter from the community spouse. Some counties ask that the letter be notarized. Ask the district what it wants before filing.
• Demand letters. HRA's legal unit has historically sent demand letters to refusing spouses after approval, asking for voluntary contribution or disclosure of finances. Whether a demand letter is followed by a lawsuit depends on the amount at stake and the spouse's visible assets. County practice ranges from near-automatic demand letters to little follow-up at all.
• Settlement authority. Districts have discretion to compromise claims. The negotiation is conducted by the spouse's attorney, or after death by the executor's attorney, with the district's recovery or legal unit. Settlement terms are case-specific, and no district publishes a formula.

Do not assume that a district's past behavior predicts its future behavior. Budget pressure on Medicaid has made recovery units more active in some years and less active in others.

Reducing or Defending the Recovery Claim

Several defenses and arguments come up when a district asserts a claim against a refusing spouse or that spouse's estate.

• Statute of limitations. Payments made more than six years before the action may be time-barred.
• Proof of the claim. The district must document what it paid. The claim is limited to the Medicaid rate actually paid, net of the recipient's own contribution.
• Means at the time. The spouse's liability under § 101 and Family Court Act § 415 is tied to the ability to pay. A spouse whose resources were at or near the CSRA, or whose income was near the MMMNA, has a strong argument that little or nothing is owed.
• Depletion of assets. Assets spent on the refusing spouse's own medical care, housing, and ordinary living expenses are gone, and the district cannot recover what no longer exists. Gifts to children after approval are a different matter and can be attacked.
• Competing claims and administration expenses. In an estate, funeral expenses, administration costs, and secured debts are paid ahead of the district's unsecured claim under SCPA 1811.

The Right of Election Problem

Spousal refusal plans often fail at the community spouse's death if the will is not updated. Under EPTL 5-1.1-A, a surviving spouse is entitled to elect against the deceased spouse's will and take the greater of $50,000 or one-third of the net estate. The net estate includes testamentary substitutes such as revocable trusts, joint accounts, Totten trust accounts, and transfers made within one year of death.

If the community spouse dies first and leaves everything to the children, the institutionalized spouse has an elective share right. Medicaid treats the failure to exercise that right as a transfer of assets for less than fair market value, which triggers a penalty period in a nursing home case. The district can also pursue the elective share on the recipient's behalf through a guardian or under the assignment of support rights.

The usual planning response has two parts. First, the community spouse signs a new will that leaves nothing outright to the institutionalized spouse. Second, the will directs an amount at least equal to the elective share into a testamentary supplemental needs trust for the institutionalized spouse. EPTL 7-1.12 permits a supplemental needs trust for a spouse when it is created by will, and a testamentary trust is excluded from the federal trust-counting rules in 42 U.S.C. § 1396p(d). The institutionalized spouse's needs are met from the trust without disqualifying him or her from Medicaid, and the remainder passes to the children. Districts sometimes still assert that the recipient should elect against the will rather than accept the trust, so this planning should be done with counsel who has handled the issue.

A waiver of the right of election signed by the institutionalized spouse is another option, but it requires capacity, must satisfy EPTL 5-1.1-A(e), and is itself scrutinized as a potential transfer.

Medicaid-Compliant Annuities and Pooled Trusts

An immediate annuity converts a lump sum in the community spouse's name into a monthly income stream. The principal stops being a countable resource. To avoid being treated as a transfer, the annuity must meet the Deficit Reduction Act of 2005 requirements in 42 U.S.C. § 1396p(c)(1)(F) and (G): irrevocable and non-assignable, actuarially sound based on the annuitant's life expectancy, paid in equal installments with no balloon payment, and naming the State of New York as remainder beneficiary in the first position, or in the second position after a community spouse or a minor or disabled child.

In a spousal refusal plan, the annuity income belongs to the community spouse. It is still income the district can point to in a support action, so the annuity reduces the resource exposure but does not eliminate the income exposure. Annuities make the most sense when the community spouse is younger, needs the cash flow, and the family wants to limit what sits in an estate at death.

A pooled supplemental needs trust solves a different problem. In a community Medicaid case, the applicant's own income above $1,800 per month would otherwise have to be paid toward care. Depositing the excess into a pooled trust each month preserves it for the applicant's benefit. The pooled trust handles the applicant's excess income; the spousal refusal handles the spouse's resources and income. The two are commonly used together in home care applications.

Is Spousal Refusal Going Away?

Executive budget proposals have sought to eliminate spousal refusal more than once, most prominently in several of the Cuomo administration's budgets, and the idea returns in Medicaid cost-containment discussions. The Legislature has declined to repeal it each time. Social Services Law § 366(3)(a) remains in force, and the districts continue to accept refusals.

If repeal were enacted, the change would most likely apply prospectively to new applications, since existing eligibility determinations are protected by due process and fair hearing rights. A family considering a refusal should act on current law and should not delay an application waiting for a budget outcome. Review the plan each spring when the state budget is adopted.

When Spousal Refusal Makes Sense

• One spouse needs nursing home or home care and the other does not.
• Combined countable resources exceed the $157,920 CSRA maximum, or the community spouse's income is well above the $3,948 MMMNA.
• No five-year trust was funded, so there is no time for the institutional look-back to run.
• The community spouse is in reasonably good health and will need the assets for his or her own support.
• The family accepts that the district may seek recovery and is prepared to defend or settle a claim.

When It Does Not Make Sense

• Both spouses are likely to need long-term care within a few years. A refusing spouse who later needs Medicaid will hold all the assets in his or her own name with no one left to refuse.
• The community spouse has a short life expectancy, so the assets will land in an estate quickly and face a recovery claim.
• Combined resources are already below the CSRA, in which case ordinary spousal impoverishment budgeting protects the community spouse without a refusal.
• The family is unwilling to have any dealings with the district after the recipient's death.

For a general discussion of moving assets between spouses outside the Medicaid context, see asset protection by holding assets in one spouse's name. For whether a spouse is liable for the other spouse's debts generally, see spousal debt liability in New York.

Other Planning Pieces That Pair With Spousal Refusal

• New will for the community spouse leaving the elective share amount to a testamentary supplemental needs trust, as described above.
• Durable power of attorney and health care proxy for both spouses, so that an agent can sign the application, the refusal, or the assignment if either spouse loses capacity. See our page on advance directives in New York.
• Beneficiary designation review on retirement accounts and life insurance so that nothing passes to the institutionalized spouse outright at the community spouse's death.
• Irrevocable prepaid funeral agreements for both spouses, which are exempt resources.
• Deed planning for the house, including whether the community spouse should later transfer the home to an irrevocable trust once the institutionalized spouse's eligibility is settled.

Frequently Asked Questions

Does the community spouse have to sign anything?

Yes. The community spouse signs the refusal statement. The applicant, not the community spouse, may be asked to sign the assignment of support rights. The community spouse is not required to disclose his or her own finances in the application, although the district may seek that information later in a support action.

Can the district sue me while my spouse is still alive and on Medicaid?

Yes. Spellman and Fishman confirm the district's right to bring a support action during the recipient's lifetime. Whether a particular district does so depends on its practice and the amount involved. Claims are limited to what Medicaid actually paid and are subject to the six-year contract limitations period.

What if we divorce?

Divorce ends spousal support liability going forward, but equitable distribution in the divorce will divide the assets, and any award to the Medicaid recipient becomes his or her countable resource. A divorce undertaken to shift assets is reviewed by the district and the court. It is sometimes used in place of a refusal, but it is a separate strategy with its own costs.

Does spousal refusal affect the house?

While the community spouse lives in the home it is exempt regardless of value. Deeding the home to the community spouse is a permitted spousal transfer. After the community spouse's death, the home is part of that spouse's estate and reachable by a recovery claim unless further planning was done.

Can spousal refusal be used for home care?

Yes. The refusal is accepted in community Medicaid applications, including enrollment in managed long-term care and CDPAP. The applicant's own income above $1,800 per month is usually directed to a pooled supplemental needs trust.

What happens to my spouse's IRA?

An IRA cannot be retitled to the other spouse during life. In New York, a retirement account in payout status taking required distributions is treated as income rather than a resource. The distributions are then budgeted as the recipient's income.

Will the district take everything I have?

No. The claim is capped at the Medicaid paid, and the court considers the refusing spouse's ability to pay, measured against the CSRA and MMMNA. Many claims are compromised. The outcome depends on the size of the claim, the assets remaining, and the defenses available.

Talk to a New York Medicaid Spousal Refusal Attorney

Spousal refusal is one of the few Medicaid tools in New York that works with no lead time. Getting it right requires correct retitling, the right paperwork for the district involved, an updated will, and a plan for the eventual recovery claim. The Law Offices of Albert Goodwin handle spousal refusal applications and recovery defense in New York City, Long Island, and the Hudson Valley. Call 212-233-1233 or email [email protected] to discuss whether a refusal fits your situation. Read more about Albert Goodwin.

References

• N.Y. Social Services Law §§ 101, 366(3)(a), 366(5), 369
• N.Y. Family Court Act § 415
• 18 NYCRR 360-4.10 (treatment of income and resources of institutionalized spouses)
• 42 U.S.C. § 1396r-5 (spousal impoverishment); 42 U.S.C. § 1396p(c), (d) (transfers, annuities, trusts)
• Morenz v. Wilson-Coker, 415 F.3d 230 (2d Cir. 2005)
• Commissioner of the Department of Social Services v. Spellman, 243 A.D.2d 45 (1st Dep't 1998)
• Commissioner of the Department of Social Services v. Fishman, 275 A.D.2d 599 (1st Dep't 2000)
• N.Y. EPTL 5-1.1-A (right of election); EPTL 7-1.12 (supplemental needs trusts)
• N.Y. CPLR 213(2); SCPA 1811
• New York State Department of Health, 2025 Medicaid income and resource levels

This page is general legal information about New York law and is not legal advice for any particular person. Medicaid figures change annually and district practices vary. Reading this page does not create an attorney-client relationship.