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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, a big portion of the couple’s financial means would go towards the cost of nursing home 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, it is important to mention that 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”. Also, important to note, non-applicant spouses are commonly called “community spouses”, “healthy spouses”, “well spouses”, and “non-institutionalized spouses”, while applicant spouses are often referred to as “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 home and community based services (HCBS) Medicaid waivers. Originally set to expire in December of 2018, Congress has extended this rule several times, which now is set to expire on Nov. 30, 2020. 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. According to a report by Kaiser Family Foundation, if Congress allows Section 2404 to expire, five states intend to stop using (or limit) spousal impoverishment protection to non-applicant spouses of HCBS waiver applicants. The states that plan to limit spousal impoverishment rules, which could mean only specific waivers will allow for spousal poverty protection, are Arkansas, Minnesota, and Illinois, while Maine and New Hampshire intend to eliminate it all together.
The elimination, or limitation of spousal impoverishment protections, for HCBS Medicaid waivers could result in a higher number of nursing home admissions for the above mentioned states. This is because 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.
That said, at the time of this writing, spousal impoverishment rules are still relevant (and mandatory) for non-applicant spouses of both nursing home Medicaid applicants and HCBS waiver applicants. As mentioned above, applicant spouses are commonly called institutionalized spouses. However, this term can be a bit confusing, since in the case of HCBS waiver applicants, spouses receive long-term care services and supports in the home and community. Stated differently, they are not actually institutionalized. However, it is possible they 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 in the situation where only one spouse is applying 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 receives is not counted towards the limit. For additional information about how Medicaid counts income for eligibility purposes, click here. That said, 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 in order to be “income eligible” for Medicaid.
However, because of the special income rule, a portion of the applicant spouse’s monthly income can be transferred to the non-applicant spouse. The minimum monthly maintenance needs allowance is a federally set amount, which increases each July. This figure is the same in all of the states, with the exception of Alaska and Hawaii, given the higher cost of living. If the non-applicant spouse has income under the MMMNA, the applicant spouse is able to transfer some (or in some cases, all) of his / her income to bring the non-applicant’s monthly income up to the MMMNA. In addition to the MMMNA, there is also a maximum monthly maintenance needs allowance, which allows non-applicant spouses to receive a higher monthly maintenance needs allowance if their cost of living requires it. (2020 numbers are in the last section of this article). Read more.
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 other assets to be owned by the non-applicant, the assets are considered owned by both spouses. Put differently, the assets are said to be jointly owned and are counted towards the Medicaid applicant’s asset limit, even when only one spouse is applying 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. However, we should back up and mention that some of the couple’s assets are not counted towards the asset limit. These “exempt” assets include the couple’s primary home, as long as the non-applicant spouse continues to live in it, household furnishings and appliances, personal items (clothing and engagement / wedding rings), and a motor vehicle.
While in the majority of the states, the Medicaid applicant is still limited to $2,000 in assets, the CSRA allows the community spouse to retain a much higher level of the couple’s joint assets. The federal government sets a minimum and maximum figure, which changes in January of each year. (The 2020 figures can be found at the bottom of this page). For additional information about the community spouse resource allowance, click here.
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 as well as spend down amounts here. Spending down can be done a variety of ways, such as 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 is applying 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 be counted towards Medicaid’s asset limit.
In the case where only one spouse of a married couple applies for long-term care, the primary home is exempt (regardless of equity 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 his / her home, it would be exempt, but only up to a certain equity value. As of 2020, this amount is $595,000 in some states, while other states allow up to $893,000. 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 to the home in the future. More about if and when Medicaid can take one’s home.
The figures below are federally set, and generally speaking, most states use them. However, some states do use different figures, or one standard figure, which falls between the federally set guidelines. To see state specific information, click here.
Minimum Monthly Maintenance Needs Allowance (Effective Jul. 2020 – Jun. 2021)
$2,155.00 for all states, but Alaska and Hawaii
$2,693.75 in Alaska
$2,478.75 in Hawaii
Maximum Monthly Maintenance Needs Allowance (Effective Jan, 2020 – Dec. 2020)
$3,216 for all states
Minimum Community Spouse Resource Allowance (Effective Jan. 2020 – Dec. 2020)
$25,728 for all states
Maximum Community Spouse Resource Allowance (Effective Jan. 2020 – Dec. 2020)
$128,640 for all states