Applying for Medicaid to cover nursing home care requires disclosing financial information not just for the applicant, but for the applicant’s spouse as well. That requirement makes sense when both spouses are willing to participate. It becomes a serious problem when the spouse living at home — known in Medicaid terms as the “community spouse” — refuses to provide that information, or simply cannot.
A New Jersey appellate decision illustrates exactly how this problem plays out, and what an applicant can do about it.
The Two Spouses in a Medicaid Application
When one spouse needs nursing home care and applies for Medicaid, that spouse is the “institutionalized spouse.” The spouse remaining at home is the “community spouse.” Federal and New Jersey Medicaid rules require the agency to assess both spouses’ combined resources, even though only one spouse is applying for benefits. This is meant to prevent asset-shifting between spouses, but it also means the community spouse’s bank records, income, and other financial information become part of the application.
Most of the time, both spouses cooperate and the process moves forward. But what happens when the community spouse won’t provide that information — whether out of refusal, illness, age, or simply being overwhelmed?
The Spousal Waiver and Spousal Refusal
Federal Medicaid law, 42 U.S.C. § 1396r-5, addresses this exact scenario in two related ways. The first is spousal refusal. Under the statute, if a community spouse refuses to make their income or resources available to the institutionalized spouse, the institutionalized spouse can still be found eligible, provided the institutionalized spouse assigns to the state any right of support from the community spouse. In other words, the applicant transfers to the state whatever legal right they would otherwise have to seek support from their spouse, and the state can then pursue the community spouse directly for reimbursement of the cost of care. The eligibility determination itself proceeds without counting the community spouse’s resources.
Second, and separately, the statute allows the state to waive its resource assessment when denying eligibility would otherwise impose an “undue hardship” on the institutionalized spouse. This is the provision New Jersey’s Division of Medical Assistance and Health Services (DMAHS) has applied in practice when a community spouse is uncooperative, but DMAHS has historically construed this waiver narrowly — generally limiting it to cases involving a documented break in the marriage, an unverifiable death or divorce, or a community spouse whose whereabouts are unknown.
That narrow approach was tested directly in N.S. v. Division of Medical Assistance and Health Services, an unpublished Appellate Division decision from 2019.
What Happened in N.S.
N.S. was an 87-year-old man admitted to a nursing facility. Before his admission, he had lived with his wife, who was 86. His daughter, acting as his authorized representative, applied for Medicaid on his behalf and began the lengthy process of gathering financial documentation — a process that dragged on for months as the county welfare agency made repeated, sometimes inconsistent, requests for records.
The daughter ran into a wall when it came to her stepmother’s financial information. The wife was elderly, in poor health, and became distressed every time she was asked for documents. She told her stepdaughter to stop asking. The nursing facility sent her three separate letters requesting the information; she did not respond to any of them. The county agency sent three more letters directly. Still no response.
The nursing facility’s attorney requested a spousal waiver, arguing that denying benefits because of the wife’s refusal to cooperate would work an undue hardship on N.S. The county agency disagreed, reasoning that because the couple had been living together and there was no evidence of a broken marriage, the waiver did not apply. N.S.’s application was denied. Both spouses died within months of each other — the wife in October 2016, N.S. in November 2016 — before the matter was resolved.
An administrative law judge upheld the denial, and DMAHS adopted that decision. The case went to the Appellate Division.
The Appellate Division’s Ruling
The court reversed. It found that DMAHS had applied an overly narrow standard by treating “estrangement” as essentially the only basis for a hardship waiver, without pointing to any regulation or formal guidance requiring that result. The court noted that DMAHS had never adopted regulations specifically interpreting the undue hardship provision — it was relying on an unwritten internal practice.
More importantly, the court held that an undue hardship determination has to be a fact-sensitive inquiry that considers the totality of the circumstances. In this case, the unrebutted facts were that the wife was elderly, in poor health, had asked her stepdaughter to stop asking for information because it was making her sick, and had not responded to six separate written requests from two different sources. There was no evidence that anyone was gaming the system to shield the wife’s assets. The agency, the court found, ignored all of this and focused exclusively on the fact that the couple had been living together before N.S. entered the nursing home — a single fact that does not, by itself, rule out hardship.
The court also found that the agency’s separate basis for denial — that N.S. himself had failed to provide his own financial records — was not supported by the record. The daughter had, in fact, provided the requested information; the agency’s own correspondence simply failed to track what had already been submitted.
The court reversed the denial and directed the agency to process the application without regard to the wife’s resources.
What This Means If You’re Applying
If you are applying for Medicaid on behalf of a spouse and the community spouse won’t or can’t provide financial information, do not assume the application is doomed. Document everything. Keep copies of every letter and email sent to the community spouse requesting information, and keep records of any response — or lack of one. If the community spouse’s refusal stems from health issues, cognitive decline, or sheer distress, get that documented too, ideally through a treating physician or a written account from someone who witnessed it.
Request a spousal waiver in writing and be explicit about the basis: cite the hardship that denial would create for the institutionalized spouse, not just the community spouse’s general unwillingness. And if the county agency denies the request based solely on the fact that the couple wasn’t estranged, know that DMAHS’s position on this issue has been challenged and rejected by an appellate court.
Spousal refusal and the hardship waiver are both narrow tools, and DMAHS does not apply them generously. An elder law attorney can help determine which approach fits your situation and how to build the record needed to support it.