Understanding Medicaid Home and Community Services: A Primer, 2010 Edition. Preventing Spousal Impoverishment

10/29/2010

In 1988, Congress mandated that states allow married couples separated by the institutionalization of one spouse to protect a certain amount of assets and income for the non-institutionalized spouse. This mandate applies regardless of how the institutionalized person establishes eligibility. Prior to this law, states protected no assets, and the amounts of income they protected for the support of the at-home spouse were at welfare-like levels--a devastating event for middle-class couples facing, perhaps for the first time in their lives, a need for public assistance because of the high cost of nursing home care.

States have the option to implement spousal impoverishment protections when one spouse is an HCBS waiver program. Doing so enables states to protect the income and assets of the spouses of waiver participants to the same extent they do for spouses of Medicaid residents in institutions.

How spousal impoverishment protection works is described here for states that wish to use it for HCBS waiver participants. There are two decisions states make within the Federal limits: (a) how much income to protect, and (b) what amount of assets (resources) to protect.

Temporary Expansion of Spousal Impoverishment Protections23

The Affordable Care Act amended the spousal impoverishment statute to mandate that states include spousal impoverishment protections in their HCBS waiver programs; all spouses of HCBS waiver participants, including those who qualify as medically needy, are covered. The mandate also extends to the spouses of participants in the HCBS State Plan benefit, as well as the new Community First Choice Option State Plan benefit (effective October 2011). The mandate will be effective from January 1, 2014 through December 31, 2019, at which point the current language of the statute will become effective again (i.e., spousal protections will be optional for spouses of HCBS waiver, HCBS State Plan, and Community First Choice Option participants).

Spousal impoverishment protections, at least as they pertain to income, are generally part of the unique Federal post-eligibility income treatment rules applicable to Medicaid-enrolled nursing facility residents and HCBS waiver participants. When applying these rules, states allocate specific portions of an enrollee’s monthly income between a personal maintenance allowance, a community spouse maintenance allowance, and the enrollee’s share of the cost of the covered services. However, Medicaid enrollees not in a nursing facility or HCBS waiver but receiving other State Plan services, may have co-pays for services they receive but will not be subject to the same income allocations as nursing facility or HCBS waiver participants. Thus, CMS will have to provide guidance to states for applying spousal protections for the spouses of State Plan service recipients.

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