Federal Medicaid law states that the community spouse can keep all of his or her assets by simply refusing to support the institutionalized spouse. This portion of the law, known as "just say no" or "spousal refusal," is generally not used except in New York and Florida, where the states have adopted the federal law in this area, and in Connecticut, where a federal court has upheld this right.
Under the law, if a spouse refuses to contribute his or her income or resources toward the cost of care of a Medicaid applicant, the Medicaid agency is required to determine the eligibility of the nursing home spouse based solely on the applicant's income and resources, as if the community spouse did not exist. In 2005 a federal appeals court upheld the right of the wife of a Connecticut nursing home resident to refuse to support her husband. The husband was able to qualify for Medicaid coverage, and assets that he had transferred to his wife were not counted in determining his eligibility.
After awarding Medicaid benefits to the institutionalized spouse, the Medicaid agency then has the option of beginning a legal proceeding to force the community spouse to support the institutionalized spouse. However, this is not always done, and when such cases do go to court, courts in New York generally allow the community spouse to keep enough resources to maintain the spouse's former standard of living. If the Medicaid agency chooses not to sue the community spouse for support, it can file a claim for reimbursement against the community spouse's estate following his or her death.
In second-marriage situations, where the healthy spouse truly refuses to support the nursing home spouse, the "just say no" strategy is sometimes used in states other than the three mentioned.