SPOUSAL
RIGHTS AND RESPONSIBILITIES
As compared to planning for an individual applicant, Medicaid planning becomes more complex when dealing with
a married couple where one spouse is institutionalized and the other spouse
intends to continue residing at home. Not only is there the concern with the
institutionalized spouse's eligibility for Medicaid, but there is the added objective of
making sure the community spouse retains or acquires sufficient income and
resources to maintain an adequate standard of living.
In an attempt to address the public policy concerns of
spousal impoverishment, federal law gives the spouse some protection from
impoverishment, while at the same time expanding spousal responsibility for the
medical assistance costs of the institutionalized spouse.
Medicaid planning for such married couples thus focuses
both on the eligibility of the institutionalized spouse and maximizing the
property rights of the community spouse to ensure that the community spouse
keeps or acquires the largest amount of resources and income permitted by law.
TREATMENT OF RESOURCES -- THE COMMUNITY SPOUSE
RESOURCE ALLOWANCE
In the case of a married couple where one spouse is
institutionalized, all property owned by the spouses, whether held individually or
jointly, will be deemed an available resource for eligibility purposes, except
that in addition to the standard resource exemptions discussed in another
section of this outline, the community spouse will
be entitled to retain or acquire assets equal to the Community Spouse Resource
Allowance ("CSRA").
DEFINITION OF COMMUNITY SPOUSE RESOURCE ALLOWANCE.
The CSRA is equal to one-half of the couple's combined
countable resources, valued once at the time the institutionalized spouse
permanently enters the nursing facility. However, the CSRA cannot be more than a
set amount, as adjusted annually for inflation ($104,400
for 2008), and it cannot
be less than a fixed amount, also adjusted annually for inflation ($20,880 for 2008).
The CSRA can be further enlarged if necessary to
generate additional income to meet the spouse's monthly maintenance needs
allowance, discussed below.
RESOURCE ASSESSMENT.
The CSRA is
calculated by taking a "snapshot" of the couple's assets, referred to as the
resource assessment, on the date the spouse is permanently institutionalized. It
is to the spouses' advantage to have the resource assessment made as soon as
possible after the spouse permanently enters the nursing facility, when records
are still readily available. The resource assessment will benefit the community
spouse by clearly fixing the amount that he or she will be entitled to exclude
from the institutionalized spouse's countable resources when the Medicaid
application is ultimately made.
TREATMENT OF INCOME -- THE MONTHLY MAINTENANCE NEEDS
ALLOWANCE
Protecting the community spouse is
concerned not only with maximizing the assets that can be acquired or retained,
but also with maximizing the spouse's monthly income.
When one spouse is institutionalized, the community
spouse can retain from his or her own income, or acquire from the institutionalized
spouse's income or from their joint income, a Monthly Maintenance Needs
Allowance ("MMNA"), which is equal to the combination of the following:
INCOME ALLOWANCE, which is the monthly
income that will increase the community spouse's income to 150% of the federal
poverty line for a couple if the spouse's own income is less than that amount,
as adjusted annually (effective July 1, 2008, the Income Allowance is $1,750).
EXCESS SHELTER ALLOWANCE, which will be
triggered if the community spouse's housing and utility bills are sufficiently
high. This allowance is based on the community spouse's total housing expenses
along with a utility allowance. As of October 1, 2006, the Monthly Utility
Allowances are as follows:
Utility Allowance, including heat:
$452.00
Utility Allowance, non-heating:
$242.00
Utility Allowance, phone
only: $30.00
If such expenses exceed 30 percent of the
above-defined Income Allowance (or $525, based on the July 1, 2008 Income Allowance
of $1,750), the excess can be retained by the community spouse from the spouse's
own income or the spouse can claim it from the institutionalized spouse's income
or from their joint income.
INCOME CAP. Notwithstanding the above
rules, the total amount that the community spouse can retain or acquire from the
institutionalized spouse's income, or from their joint income, cannot exceed a
set amount, adjusted annually for inflation (as of January 1, 2008, the cap is
$2,610). A higher limit can be set pursuant to a fair hearing or court order.
Options When
Community Spouse’s Income Does Not Reach the Monthly Maintenance Needs Allowance
In many cases the community spouse’s income will not
be sufficient to meet the MMNA. There have been two general solutions to this
problem: (1) the income-first approach and (2) the resource-first approach.
Resource-First Rule up to October 1, 2005
Up until October 1, 2005, Pennsylvania was a
resource-first state. Under that rule, additional assets over and above the normal CSRA could
be protected where the community spouse had a relatively high MMNA and could
establish that his or her own income, and the income deemed generated by the
CSRA, would not produce enough income to reach the MMNA. In this event the
community spouse could acquire or retain additional assets in an amount
necessary to reach the MMNA.
Modified Income-First Rule as of October 1, 2005
Effective October 1, 2005, Pennsylvania adopted a
modified income-first rule that required the community spouse to first take a
portion of the other spouse’s income equal to the income that would be
available if the other spouse predeceased the community spouse. Only if the
MMNA was still not met by this additional income could the community spouse
take additional resources.
Income-First Rule After February 8, 2006
New federal law has significantly changed the rules
regarding the computation of the CSRA in cases where the community spouse’s
monthly income does not reach the MMNA. Federal law
now requires the states to treat all income of the institutionalized spouse that
could be made available to a community spouse to meet the MMNA as made
available before the community spouse can be allocated any amount of resources
adequate to make up the difference between the MMNA and all income available
to the community spouse.
EFFECT OF NEW INCOME-FIRST RULE
To obtain the MMNA the community spouse must start by
applying all of his or her own income, such as Social Security, pensions, and
the required minimum distribution from IRAs.
In addition, the community spouse will be deemed to
receive an amount of income from the standard CSRA. This amount is currently
calculated on a monthly basis by multiplying the CSRA by 1.5% and dividing the
result by 12.
The community spouse can next take whatever amount of
the institutionalized spouse's income that is necessary to reach the MMNA.
If the community spouse still needs additional income to reach
the MMNA, he or she will finally be able to reach the institutionalized spouse's
assets. However, rather than being free to hold or invest such assets in any way
the community spouse chooses, as was the case under the old rules, DPW will now
require the community spouse to use such additional assets to purchase an
actuarially sound commercial annuity for a term certain (Lifetime Guaranteed
Period Annuity) equal to the community spouse's life expectancy. In addition,
DPW must be named as contingent beneficiary if the community spouse dies during
the guaranteed period certain up to the amount that Medicaid will have paid for
the institutionalized spouse’s care.
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