Definitions
To better understand the Medicaid Community Spouse Resource Allowance (CSRA), it is important to understand the terminology associated with it.
- Community Spouse – the spouse who is not applying for long-term care Medicaid, also commonly called the non-applicant spouse, healthy spouse, or well spouse.
- Institutionalized Spouse – the applicant spouse, sometimes called the nursing home spouse. The term, “institutionalized” is misleading as the CSRA isn’t only for married couples with one spouse seeking nursing home care. It is also for married couples with one spouse applying for long-term care services in their home or community via a Medicaid waiver.
- Resources – commonly called assets. For Medicaid purposes, there are both countable (non-exempt) and non-countable (exempt) resources. Learn which assets are counted towards the asset limit and which are not below under “Which Resources are Countable”.
What is the Community Spouse Resource Allowance?
In the situation with married couples when only one spouse is applying for Medicaid long-term care, there are federal spousal impoverishment rules in place to prevent the non-applicant spouse from having too little income and resources on which to live. Because Medicaid is for persons with very limited resources and very little income, a married couple might end up in the situation where one spouse enters a nursing home and the other spouse has no money on which to live.
When an elderly individual applies for Medicaid, there is an asset requirement that must be met. This means the applicant is limited to a certain amount of assets, which may vary based on state. However, generally speaking, as of 2020, the asset limit for a married senior applicant is $2,000. Assets of a husband and wife are considered jointly owned, and a greater portion of the assets can be allocated to the non-applicant spouse. The assets the non-applicant spouse is permitted to retain is referred to as the Community Spouse Resource Allowance (CSRA).
It is worth noting that a similar rule exists for income. This is called the Minimum Monthly Maintenance Needs Allowance (MMMNA). The MMMNA allows applicant spouses to transfer a portion of their income to their non-applicant spouses. For the purposes of this article, the focus will be on the Community Spouse Resource Allowance and protecting joint assets for the non-applicant spouse.
Minimum and Maximum Resource Allowance Amounts
The resource allowance is the amount of assets to which non-applicant spouses are entitled. There is a minimum resource standard and a maximum resource standard. As of 2020, the minimum resource standard is $25,728 and the maximum resource standard is $128,640. These standards are set by the federal government, but states are permitted to set their own standards within these parameters.
Some states have a maximum resource limit under the federally set standard of $128,640. For instance, as of 2020, South Carolina limits their maximum resource allowance to $66,480, and Illinois sets their limit at $109,560. To see state specific community spouse resource allowance figures, click here.
Make note, not all resources are counted, which means they are exempt and are not calculated and included in the resource allowance.
Which Resources are Countable?
Not all of a couple’s assets or resources are counted when calculating the Community Spouse Resource Allowance. There are Countable (Non-Exempt) assets and Non-Countable (Exempt) assets.
Countable (Non-Exempt) Assets
Countable assets are generally considered liquid assets, which are assets that can easily be converted to cash and be used to pay for long-term care. Examples include cash, certificates of deposit, stocks, bonds, and vacation properties.
Non-Countable (Exempt) Assets
Several assets are considered exempt and are not factored in when adding up a couple’s assets to calculate the CSRA. These include the couples’ primary home, given the non-applicant spouse lives in the home, household furniture and appliances, clothing, an automobile, irrevocable (it cannot be changed or cancelled) funeral and burial trusts, and life insurance policies with a total face value under a certain amount (generally $1,500).
How to Calculate the Community Spouse Resource Allowance?
Generally, the first day of institutionalization (with a minimum of a 30-day stay) of the applicant spouse, or the date the applicant spouse qualifies for a Medicaid waiver, is referred to as the “snap shot” day. On this day, all countable assets are added up, regardless of whose name is on the resources, as they are all considered jointly owned. The calculated figure is then divided by two, with half of the assets considered owned by the applicant and the other half owned by the community spouse. The community spouse can retain half of the assets up to the maximum resource standard, which as of 2020, is $128,640 for the majority of the states. The minimum resource allowance is intended to protect those couples that have very limited resources. As mentioned previously, this figure is $25,728 in 2020. Therefore, the community spouse is entitled to keep up to $25,728 of the couples’ assets even if the amount is greater than 50% of the total assets.
Please note, in some states, which are called 100% states, community spouses are entitled to 100% of the couple’s assets up to the maximum resource allowance for their state. (In 2020, this figure is $128,640 in most states).
Remember, the applicant spouse is only able to retain $2,000 in assets (in most states in 2020). As an example of what happens if the applicant spouse’s portion of assets is over $2,000, say a married couple has $250,000 in countable assets. This means $125,000 is considered owned by the applicant spouse and the other $125,000 owned by the non-applicant spouse. Since the non-applicant spouse’s half is less than the maximum CSRA of $128,640 (for 2020 in most states), he / she is able to keep the entirety of his / her half. However, with the applicant spouse’s half of the assets, $125,000, he / she is $123,000 over Medicaid’s $2,000 asset limit. Therefore, he / she is asset ineligible and must “spend down” the extra $123,000 to meet the $2,000 asset limit.
In a 100% state, the non-applicant spouse can keep $128,640 of the couple’s $250,000 in assets. This leaves $121,360 that is considered owned by the applicant spouse. Since the applicant spouse is only allowed $2,000 in assets, he / she must “spend down” the remaining $119,360 to become asset eligible.
Asset Spend Down
For those who are over the asset limit after taking the CSRA into account, assets will have to be “spent down” to meet the Medicaid asset limit. One might spend down assets by converting countable assets into non-countable assets. Examples include making home improvements and modifications (updating heating and plumbing systems, adding a first floor bedroom, installing a chair lift, etc.), paying off debt (mortgage, credit cards, medical bills), and prepaying funeral and burial expenses. One can also turn countable assets in an income stream via a Medicaid compliant annuity. To learn more about asset “spend down”, click here.
Seek the Advice of a Professional Medicaid Planner
Medicaid eligibility can be complicated, particularly if one is over the asset limit. When spending down assets, one needs to be cautious. Giving away assets or selling them under fair market value can violate Medicaid’s look back period, and one can be penalized with a period of Medicaid ineligibility. If one is over the asset limit, it is highly advisable the counsel of a professional Medicaid planner is sought.