Trapped in America's Safety Net

There’s one thing Dave could do to get out from under Marcella’s Medi-Cal restrictions: divorce her. This would separate Marcella and Dave’s income and assets. Only Marcella would then be forced into impoverishment; Dave could keep his half of the assets. And he and Logan would be free to live on as much income as Dave could make, to accept help from family members, to establish a 529 college fund, to have emergency money put away, to save for Dave’s retirement. In other words, they could go back to their middle-class life. And unattached to a spouse, Marcella would be eligible for means-tested programs without the “deeming rules” that count a spouse’s income and assets. Such “Medicaid divorces” are common among the elderly. When one member of a couple becomes disabled and needs to move to a nursing home, the couple divorces to separate their assets. Then the disabled former partner “spends down” his or her assets on nursing home fees until the state’s asset limit is reached, and then goes on Medicaid. In this manner, some assets for the spouse remaining in the community are protected.