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What Are Spousal Impoverishment Rules & Why They Exist?
Spousal impoverishment rules are federal Medicaid regulations that are intended to prevent non-applicant spouses from becoming poverty-stricken in order for their applicant spouses to qualify for long-term care Medicaid. Prior to the establishment of “spousal impoverishment protection” in 1988, non-applicant spouses of nursing home Medicaid recipients were commonly left financially unable to support themselves. This is because Medicaid has income and asset limits, and in order for an applicant spouse to qualify for Medicaid, these limits must be met. Therefore, a big portion of the couple’s financial means would go towards the cost of nursing home care before the applicant spouse would qualify for Medicaid-funded care.
Spousal impoverishment rules include a Minimum Monthly Maintenance Needs Allowance (MMMNA) and a Community Spouse Resource Allowance (CSRA) that “protect” a portion of a couple’s income and assets (including the home) for the non-applicant spouse. Thereby, preventing the impoverishment of the non-applicant spouse.
When discussing spousal impoverishment rules, in addition to being called spousal impoverishment protections, persons may also hear the terms “special income rules”, “income protections”, “asset protections”, and “Medicaid protections for the healthy spouse”. Non-applicant spouses are commonly called “community spouses”, “healthy spouses”, “well spouses”, and “non-institutionalized spouses”, while applicant spouses are often called “institutionalized spouses”.
When & For Whom Are Spousal Protections Relevant?
While the original implementation of spousal impoverishment rules were strictly for non-applicant spouses of Nursing Home Medicaid applicants, in January of 2014, Section 2404 of the Affordable Care Act extended these rules to married couples with one spouse applying for a Home and Community Based Services (HCBS) Medicaid Waiver. Originally set to expire in December of 2018, Congress has extended this rule several times. It is currently set to expire September 30, 2023. If another extension is not granted, each state will have the option to apply (or not to apply) spousal impoverishment rules to HCBS Medicaid Waivers.
The elimination of spousal impoverishment protections for HCBS Medicaid Waivers could result in a higher number of nursing home admissions. If a Waiver does not allow “protection” of income and assets for a non-applicant spouse, the couple may be forced to use the majority of their income and assets to pay for long-term care, enabling the applicant spouse to become Medicaid eligible. On the other hand, Nursing Home Medicaid would still allow for spousal impoverishment rules, allowing non-applicant spouses to “protect” a much larger portion of income and assets.
Currently, spousal impoverishment rules are still relevant (and mandatory) for non-applicant spouses of both Nursing Home Medicaid applicants and HCBS Waiver applicants. While applicant spouses are commonly called institutionalized spouses, this term can be confusing. This is because in the case of HCBS Waiver applicants, long-term care services and supports are received in the home and community; beneficiaries are not actually institutionalized. However, it is possible for them to live in an assisted living facility, memory care residence, or adult foster care home rather than their own home.
Detailed Description of Spousal Impoverishment Rules
There are two parts to Medicaid protections for the healthy spouse. This includes an income allowance and a resource allowance. We have also included a third section specific to how a home is treated.
Minimum Monthly Maintenance Needs Allowance (MMMNA)
Prior to discussing the MMMNA, it should be mentioned that when only one spouse applies for Nursing Home Medicaid or a HCBS Medicaid Waiver, only the income of the applicant spouse is counted towards Medicaid’s income limit. Any income that the non-applicant spouse receives is disregarded. However, an issue arises when the applicant spouse is the only one who receives income or receives the majority of the couple’s household income. This is because the applicant spouse has an income limit that must be met to be “income eligible” for Medicaid. More on how Medicaid counts income for eligibility purposes.
The Minimum Monthly Maintenance Needs Allowance is the minimum amount of monthly income to which the non-applicant spouse is entitled. Due to this special income rule, the applicant spouse can transfer a portion, or sometimes all, of their monthly income to their non-applicant spouse as a spousal income allowance. The federal government sets a Minimum Monthly Maintenance Needs Allowance, which increases annually on Jul. 1. The MMMNA is based on the Federal Poverty Level (FPL), and since Alaska and Hawaii have state-specific FPLs, these states have differing MMMNA’s than the rest of the states. If the non-applicant spouse has income under their state’s MMMNA, they can receive income from their applicant spouse to bring their income up to the MMMNA. The federal government also sets a Maximum Monthly Maintenance Needs Allowance. In some states, this allows non-applicant spouses to receive a higher Monthly Maintenance Needs Allowance based on their shelter costs (i.e., mortgage / rent payments, homeowner’s insurance, utilities).
Community Spouse Resource Allowance (CSRA)
The consideration of resources, commonly called assets, for married couples is not the same as with income. Instead of some assets considered to be owned by the applicant and others owned by the non-applicant, all assets are considered jointly owned. This means all assets are counted towards the Medicaid applicant’s asset limit, even when only one spouse applies for long-term care Medicaid. This is where the CSRA comes in, as it “protects” a portion of the couple’s assets for the non-applicant spouse. Furthermore, some of the couple’s assets are exempt; they are not counted towards the asset limit. This generally includes the couple’s primary home, household furnishings and appliances, personal items, such as clothing and engagement / wedding rings, and a motor vehicle.
While a Medicaid applicant is generally limited to $2,000 in assets, the CSRA allows the community spouse to retain a much higher amount of the couple’s assets. The federal government sets a Minimum Community Spouse Resource Allowance and a Maximum Community Spouse Resource Allowance. Both figures increase each year on Jan. 1.
If a couple has assets greater than the allowable amount, they will have to “spend down” their assets in order to meet the combined Medicaid asset limit for the applicant and non-applicant spouse. Calculate your total countable assets and spend down amounts here. Spending down can be done in several ways. Examples include paying for home modifications to improve safety and accessibility, prepaying funeral / burial costs, and purchasing a Medicaid compliant annuity (converting assets into a monthly income stream). For more information about planning strategies to meet the asset limit, and to protect an even larger amount of assets for non-applicant spouses, click here. Implementing some of these strategies can be complicated, and if not done correctly, can violate Medicaid’s look-back period, resulting in Medicaid disqualification. For persons who have “excess” assets, Medicaid planning is strongly recommended. Locate a planner in your area here.
Protection of the Home
A common concern of married couples in which only one spouse applies for long-term care Medicaid is their home. Often it is asked, “Will Medicaid take my home?” While understandably a big worry, there are federal rules in place to protect the home. To be very clear, primary homes, meaning the home one lives in, are almost always exempt from Medicaid’s asset limit. On the other hand, vacation homes are not exempt and will count towards Medicaid’s asset limit.
When only one spouse of a married couple applies for long-term care, the primary home is exempt (regardless of equity interest value) as long as the non-applicant spouse continues to live in it. However, even if the Medicaid applicant were single, there are federal laws in place to protect the home. For instance, if a Medicaid recipient receives home and community based services from Medicaid, but remains living in their home, it would be exempt, but only up to a certain equity interest value. In 2023, this amount is generally $688,000 or $1,033,000, depending on the state in which one resides. Even in the case where a single Medicaid recipient moves into an assisted living facility or nursing home, the home is protected as long as the applicant expresses an intent to return home. More about if and when Medicaid can take one’s home.
The figures below are federally set. While most states use these figures, some states use different figures, or one standard figure, which falls between the federally set guidelines. See state specific information here.
Minimum Monthly Maintenance Needs Allowance (Effective Jul. 2022 – Jun. 2023)
$2,288.75 for all states, but Alaska and Hawaii
$2,861.25 in Alaska
$2,632.50 in Hawaii
Maximum Monthly Maintenance Needs Allowance (Effective Jan. 2023 – Dec. 2023)
$3,715.50 for all states
Minimum Community Spouse Resource Allowance (Effective Jan. 2023 – Dec. 2023)
$29,724 for all states
Maximum Community Spouse Resource Allowance (Effective Jan. 2023 – Dec. 2023)
$148,620 for all states