Couples Divorcing to Save on Long-Term Health Costs

Elderly couples are divorcing at a higher rate than ever before for a surprising reason: soaring medical and long-term care costs. These expenses are being aggravated by longevity and uninsured risk from a lack of long-term care insurance. Although these senior couples still care for each other very much, the cost savings from divorce are inflicting the least amount of damage when compared to other financial options.

Medicare and Medicaid

Seniors are now turning to divorce to stave off financial ruin trying to qualify for Medicare and Medicaid coverage. In terms of Medicare coverage, the program only covers 100 days of nursing care. If you or your spouse needs long-term nursing care you must either pay out of pocket until your assets fall beneath a certain threshold or tap into your long-term care insurance if you have it.

If you do not have long-term care insurance, you must pay out of pocket as a couple until your assets are spent down and Medicaid steps in as a last resort. If you’re married, all liquid assets must be tapped regardless of which spouse’s name is listed on the asset. However, once Medicaid steps in the spouse is guaranteed care for the remainder of his or her life.

Divorce as a Financial Option

The divorce rate for seniors has doubled since 1990, and now over 28% of people divorced in the last year were over the age of fifty. According to the Census Bureau American Community Survey, in 2011 a total of 15.4% of seniors were divorced and another two percent were separated. There are a number of reasons behind the rising divorce rate, but one of the main causes cited was an increase in long-term health costs.

Considering divorce as a cost-saving option can be an emotionally fraught issue for loving couples. For the healthy spouse, it can feel profoundly wrong or immoral to divorce an ailing spouse despite the good intentions behind the decision. However, it is important to remember that a paper divorce does not mean that the healthy spouse is any less present in the ailing spouse’s life.

An Example of Elderly Divorce

Take for example the hypothetical situation of an elderly couple, married but with separate assets and dealing with the ailing health of one spouse. For years, they have engaged caregivers to help, but now the costs are reaching over $3,000 per month for care. The ailing wife’s resources are completely depleted, and the husband’s separate assets are dwindling as he pays for her care.

For this couple, one of the best options for her care and his assets would be to get a paper divorce. With her assets depleted, the ailing wife will qualify for Medicaid, and his resources will remain intact in case he requires care in the future. If they remain married, he will be forced to continue to spend his assets on her care until they are both left with nothing, and he will have very little to cover his own living expenses or future care.

A paper divorce does not interfere with his responsibilities for her, and he can still oversee and coordinate her care through the use of a healthcare proxy and power of attorney. While the husband may feel like he is betraying his wife and taking advantage of the system, he also realizes the logic of divorce and how the decision is the best for both of their interests and long term care.

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