H.K. v. DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES AND CAPE MAY COUNTY BOARD OF SOCIAL SERVICES, 379 N.J. Super. 321 (App. Div. 2005), A-6041-03T2, July 29, 2005:

The 1988 amendments to the Federal Medicaid statute, which created the community spousal allowance, were intended to prevent community spouses from becoming impoverished. Congress recognized that, particularly for women who had been homemakers, and who relied on their husbands’ pensions for support in their old age, the requirement that the husbands’ entire income be used to pay nursing home bills represented an economic catastrophe. H.R. Rep. No. 100-105(II), at 65 (1987), reprinted in 1988 U.S.C.C.A.N. 857, at 888 (1987). Congress recognized that under the existing Medicaid law, some community spouses were forced, in desperation, to sue their institutionalized spouses for support. Id. at 69, 1988 U.S.C.C.A.N. at 892. The amendments were designed to avoid that need, by allowing some portion of the institutionalized spouse’s pension or other income to be used to support the community spouse. Ibid.

In that context, Congress also recognized that under “special circumstances,” a court order for support might supercede the normal community spouse allowance:

Court ordered support. — The Committee recognizes that there will be some instances in which the rules set forth in the bill do not take adequate account of the special circumstances affecting a particular community spouse. The bill therefore provides that, if a court has entered an order against an institutionalized spouse for monthly income for the support of the community spouse, the community spouse monthly income allowance must be at least as great as the amount of the income ordered to be paid.

[Id. at 72, 1988 U.S.C.C.A.N. at 895-96.]

In this case, H.K. and R.K. attempted to invoke the “court order” exception of N.J.A.C. 10:71-5.7(f), by obtaining a divorce from “bed and board” ^[1] with a property settlement agreement providing for support to be paid to R.K. from H.K.’s pension. The divorce action was finalized by consent. The Final Judgment of Divorce From Bed and Board specifically recited that the property settlement agreement, incorporated in the judgment, was entered without the court having taken testimony “as to the merits thereof, and therefore [the court] makes no judgment with respect to the fairness thereof.” Based on this final judgment, H.K. sought recalculation of H.K.’s Medicaid benefit, claiming that the court order for her support superceded the cap on the spousal allowance. But, the Board declined to recognize H.K.’s support obligation to R.K. as a deduction for Medicaid purposes.

This case concerns the tension between the State’s effort to conserve Medicaid resources for the truly needy and the legal ability of institutionalized Medicaid recipients to shelter income for the benefit of their non-institutionalized spouses. In this case, the court held that the applicant and his wife transgressed the permissible limits of Medicaid planning by entering into a divorce from bed and board and agreeing, in a consent order entered without judicial fact finding, that the institutionalized husband’s pension benefits would be paid to the wife as alimony.

Also, in this case, the State Medicaid program was not served with the complaint or otherwise given notice of the proceeding. As a result, the proceeding was not genuinely adversarial, no factual record was made to support the alimony award, and the court that entered the order did not determine whether the award was justified in light of the countervailing interests of the State in having H.K. use his income to pay for his nursing home care.

NOTE: This Blog/Blawg, NJ Family Issues, is managed by Paul G. Kostro, Esq., an attorney/lawyer/mediator in Linden, Union County, New Jersey.

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1. Also known as a “limited divorce,” a divorce from bed and board does not dissolve the marriage; it formalizes the couple’s arrangement to live separately and requires one spouse to pay for the other spouse’s separate living expenses. N.J.S.A. 2A:34-3; see Weinkrantz v. Weinkrantz, 129 N.J. Super. 28, 32-33 (App. Div. 1974). As a result of the divorce from bed and board, H.K.’s wife remained a “community spouse” for Medicaid purposes. See N.J.A.C. 10:71-5.7(c). [↩]