Getting Divorced to Avoid Mandatory Medicaid Spend Down: A Good Idea or Not?

A lot of spouses will discuss the topic of divorce when their loved one is diagnosed with a degenerative condition that requires or will likely require long term care.  They are terrified about losing everything to a nursing home or significant medical expenses.  Their fear is justified and very understandable when it comes to Medicaid divorce.

But Be Cautious!

Let me start out by saying that divorce can be a planning option in appropriate circumstances. The goal of a Medicaid divorce is to have the community spouse keep more of the family’s resources ($$) and income than would be available under New Jersey Medicaid laws and regulations. But a Medicaid divorce should not be rushed into. Why? Because the couple must really get a legal divorce. After 20, 30 or more years of marriage it may be difficult to persuade Mom or Dad to divorce their life partner regardless of the economic benefits. Natural and often uncomfortable emotions – guilt, abandonment, a sense of failure, etc. must be carefully weighed and respected… at least that’s my opinion. But divorce is an option, so let’s evaluate and discuss it now.

Divorce and Qualifying For New Jersey Medicaid

Second or More Marriages

Divorce can be a better option in a second (or more) marriage(s) where the emotional investment may (emphasis on “may”) be less compelling. Often the children of the earlier marriages will advocate divorce to protect their parent from the devastating costs of a nursing home and/or other long-term care expense(s) that will impoverish or greatly reduce their parents’ standard of living.

What many advocates of divorce fail to understand is that Medicaid examines the details of divorce very closely.  They will question many, if not most aspects of the economic agreement between the spouses as set forth in the property settlement agreement.

Instead of filing for divorce, it may be possible to achieve the same or even a better result(s) by adopting a “strategic” Medicaid asset protection plan instead of getting a divorce. In order to make the right decision, you really need to know the pros and cons of divorce and Medicaid.

I want you to call, come in or video/phone conference with me. Let me explain how the Medicaid laws work and what the benefits and disadvantages of a Medicaid divorce are. We’ll talk dollars and sense. We’ll talk about how to file for divorce and what you can expect as the likely outcome.

Just wanted to take a minute to personally thank you for everything. It’s been a long road but, you and your staff were a pleasure to deal with and made the Medicaid process seem less painful.
I could not have gone through it alone. No one should attempt applying for Medicaid without an attorney. The process needs professional guidance to avoid problems that may arise.

I can’t thank you enough, not only for your expertise but, for your hand holding and patience with me during this difficult time. Thank you.
Christine LaSpina, Red Bank, NJ

Moving Forward With Divorce – The Importance of Timing Your Divorce

Timing a divorce relative to the need for Medicaid eligibility is critical. The goal is to time the filing of the divorce complaint to maximize the valuation of assets for purposes of equitable distribution and avoid the need for calculating the income and resource allowance required under the Medicaid spend-down rules. The reason why the timing of the divorce is also critical is that the Judgment of Divorce must be obtained before the Medicaid eligibility date and before a Medicaid application is filed.

Avoiding Medicaid Penalties in a Divorce

If you have read earlier sections of this website, you have a better understanding that once a person applies for Medicaid, there is a five-year “look back” period to determine if any assets were disposed of for less than the fair market value during this time. This rule applies to divorces. Assets and income that an individual or the individual’s spouse was/is entitled to but does not receive because of his or her actions in a divorce are closely examined. Examples include waiving pension income, waiving equitable distribution rights, waiving alimony, etc. Filing for divorce with a property settlement agreement where equitable distribution is less than 50% of the marital assets can result in conflicts with Medicaid regulations. New Jersey matrimonial law favors the division of marital property based on “equitable principles of marriage” giving recognition to the economic and non-economic contributions of each spouse. Medicaid, however, does not understand the term “equitable”; to them, only dollars and cents matter.

To avoid transfer penalties against the spouse applying for Medicaid, it is essential that the division of assets be for reasons other than expediting Medicaid eligibility. Therefore, a matrimonial family court judge should make findings of fact and conclusions of law to support his or her ruling regarding equitable distribution.  A stipulated property settlement agreement that is not articulated before the judge assigned to the case should be avoided.

Selecting the Grounds for Divorce

Suffice it to say that in New Jersey, getting a divorce is easy, at least establishing the grounds for divorce is easy. Therefore, I’m not going into the grounds for divorce because if divorce seems to be the right option for you or your loved one (after reading this site), then you and I can discuss the grounds together with all the collateral issues I raise.

What if a Spouse is Mentally Incapacitated?

If cognitive/mental capacity is questionable (i.e., Alzheimer’s, Dementia, Stroke, ALS, etc.) before moving forward on a plan that will forever change the parties’ relationship and redistribute their assets, we first have to determine whether the disabled spouse has the legal capacity to make decisions on his or her behalf, including getting a divorce or defending against a divorce. If not, is there a Power of Attorney in place? If so, is the Power of Attorney sufficiently comprehensive to enable the agent to file for and respond to divorce proceedings? Note that the healthy/well spouse cannot serve as the Power of Attorney in a divorce. If the disabled spouse does not have the legal capacity to sign a new Power of Attorney/agent, then someone will have to initiate legal proceedings, likely guardianship, before the divorce can proceed. The terms “Powers of Attorney” and “Guardianship” may not be familiar to you. Don’t worry.

Weighing Medicaid Benefits Against Divorce, Alimony, and Equitable Distribution

If a spouse is not well (a/k/a disabled, incapacitated), the healthy (healthier) non-disabled spouse and his/her children need to weigh the benefits of staying married and not getting divorced and then establish Medicaid eligibility for the disabled spouse under existing Medicaid regulations.

As I mentioned, Medicaid policy and rules seek to discourage divorce for the purpose of establishing Medicaid eligibility. They critically evaluate the grounds for divorce and will request a filed copy of the judgment or order of equitable distribution and alimony from the disabled spouse. The reason for their policy is once the divorce is filed and finalized, the disabled spouse can apply for Medicaid as a single person. Qualifying as a divorced single person is often easier than applying as a married couple, especially when the divorced spouse does not have to disclose his/her assets.

Must Medicaid Recognize a Family Court Order of Alimony And Support

Whether to get divorced is a tough decision and I truly understand. Let’s sit down together and discuss the pros and cons of a divorce in your situation. Everyone around you will tell you something different. Perhaps your head is (or will be) spinning with confusion and paralysis. But remember this… I’m here for you. Call me today toll-free at (855) 376-5291 or email me at It’s my pleasure to be of service.

Considering Alternatives to Absolute Divorce

There are alternatives to divorce. I especially recommend these alternatives to younger spouses when their spouse (generally the male) has a devastating stroke, concussion or accident (etc.) which unfortunately does not kill him (or her) but leaves him profoundly and permanently disabled and/or incapacitated.

One option is to have the well spouse file for an “order of support” from the disabled/institutionalized spouse. This is a very good choice if the expenses of the community spouse are very high (such as support of children, college bills, household expenses, mortgage, etc.) and the income of the institutional spouse is also high (due to pension, disability insurance, etc.). The amount of family support ($$$) that can be ordered in favor of the family by a judge as a substitute for the Community Spouse Resource Allowance under Medicaid regulations can be significant. But again, the support order must be entered before the Medicaid application is filed.

Another option to achieve Medicaid eligibility is to consider a divorce from “bed and board” instead of an absolute divorce (I know it sounds confusing since we would think a divorce is a divorce but sometimes divorce is not a real divorce). A divorce from a bed and board does not dissolve the marriage; it confirms the couples’ arrangement to live apart but does not require one spouse to pay for the other spouse’s separate living expenses and those of their children.

A divorce from bed and board has the same effect on the rights of the parties as a judgment of absolute divorce and offers some additional benefits, the details of which I need not cover here. But there is some loss of rights and benefits as well which I can explain to you in person should your circumstances cause you to contemplate a Medicaid divorce.

Premarital Agreements and Medicaid Eligibility in New Jersey

Medicaid says it does not recognize pre-marital agreements signed by prospective spouses prior to entering a first, second or subsequent marriage.  A pre-marital agreement is a signed contract between two competent adults prior to marriage that addresses each other’s financial support obligations and responsibilities to the other during the marriage and/or in the event of divorce or the death of either spouse.  These agreements are legally binding upon each signatory provided certain formalities and disclosures are made (these formalities and disclosures are outside the scope of this page).  But there are strategies that I believe preclude Medicaid from refusing to recognize these agreements.  In my opinion, Medicaid is powerless to deny an otherwise lawful premarital (a/k/a prenuptial agreement) legality.  To be successful, however, requires a deliberate strategy and precise timing.

So, What Should You Do if You Have a Pre-Marital Agreement?

My strategy requires an immediate application to the Superior Court to obtain a judgment that declares the prenuptial agreement enforceable and enters a divorce from the prospective (or actual) institutional spouse.

There is an interesting dynamic and running conflict within New Jersey laws when this strategy is contemplated.  First, there are published cases that hold each spouse to be legally responsible to the other spouse for life’s “essential necessities”.  However, this case law does not address the enforceability of those obligations when a premarital agreement has been lawfully signed by the spouse prior to marriage.  Therefore, filing for divorce and enforcing the terms of the premarital agreement is your only option to escape Medicaid’s non-negotiable position on marriage, which is if you’re married when you file for Medicaid, you’re bound by the Medicaid laws.

Please read my extensive blog on this subject found under the Recent Posts/Blogs section of this page.  Click here

As I have repeated here often, whether to get divorced is a tough decision.  Let’s sit down together and discuss the pros and cons of a divorce in your particular situation.  I’m here for you. Call me today toll-free at (855) 376-5291 or email me at It’s my pleasure to be of service.