MCCA’s Legislative History

The following the committe report for the Medicare Catastrophic Coverage Act of 1988 (MCCA):

The leading cause of financial catastrophe among the elderly is the need for long-term care, especially the need for nursing home placement. The expense of nursing home care–which can range from $2,000 to $3,000 per month or more–has the potential for rapidly depleting the lifetime savings of all but the wealthiest. Even under the Committee’s bill, Medicare’s expanded skilled nursing facility benefits will not protect the elderly against the costs of long-term institutionalization. Private insurance coverage for nursing home costs is not widely available. For most of the elderly, the Medicaid program is the only third party source of payment for nursing home care. Medicaid, a means-tested entitlement program, requires that the elderly or disabled nursing home resident be poor in order to qualify for coverage. It also limits the income that an institutionalized spouse may make available for the spouse remaining in the community. If the institutionalized spouse receives the pension and other income in his name, this limit may have the effect of impoverishing the spouse in the community. The purpose of the Committee bill is to end this pauperization by assuring that the community spouse has a sufficient–but not excessive–amount of income and resources available to her while her spouse is in a nursing home at Medicaid expense. This will be of particular benefit to older women, who, in the current generation at risk of nursing home care, have often worked at home all their lives raising families and have limited income other than their husbands’ pension checks.

Current law.–To determine how much is available for the community spouse to live on when her elderly spouse in the nursing home applies for Medicaid, it is necessary first to determine whether the institutionalized spouse is eligible for Medicaid based on income and resources. If eligibility is established, it is then necessary to determine how much of the institutionalized spouse’s monthly income is to be applied to the cost of nursing home care, and how much is to be available to the community spouse. Eligibility standards.–In general, in order to qualify for Medicaid, an individual must be categorically related–that is, be aged, blind, disabled, or a member of a family with dependent children–and must meet certain income and resources standards. In most States, elderly or disabled people receiving cash assistance under the Supplemental Security Income (SSI) program are automatically eligible for Medicaid. Aged or disabled individuals may receive SSI benefits if their countable income and countable resources do not exceed specified standards. The basic SSI income standard for an individual in 1987 is $340 per month, but many States have elected to supplement this benefit with their own funds. The basic SSI resource standard for an individual in 1987 is $1,800. In determining countable resources, a number of items are excluded, including the individual’s home (of any value), household goods and personal effects worth less than $2,000, an automobile **889 *66 with a market value of $4,500 or less, and up to $1,500 in life insurance or burial funds. Not all States automatically extend Medicaid coverage to SSI beneficiaries. In about 14 States, known as “209(b)” States, eligibility standards, particularly resource rules, more restrictive than those under SSI are applied to the elderly or disabled. In about 35 States, elderly individuals who are not poor enough to qualify for SSI, but who have large, recurring medical expenses, such as nursing home bills, qualify for Medicaid as medically needy.” Finally, about 30 States offer coverage, on an “optional categorically needy” basis, to nursing home residents whose incomes fall below a State-established special income level no higher than 300 percent of the basic SSI benefit level ($1,020 per month in 1987). There are roughly 1.5 million Medicaid beneficiaries in nursing homes, whether skilled nursing facilities (SNFs) or intermediate care facilities (ICFs). Less than one-fourth of those are poor enough to qualify for SSI cash assistance. The remaining three-fourths are eligible either as “medically needy” or “optional categorically needy.” Individuals who qualify for Medicaid in nursing homes on either of these bases must apply a certain portion of their income toward the cost of their nursing home care. It is these post- eligibility rules, in combination with the rules for attributing income and resources, that give rise to the problem of “spousal impoverishment.” [Note 4]

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The Committee bill would end spousal impoverishment. [Note 5]

The purpose of this Chapter is to summarize the MCCA spousal impoverishment provisions and how they work. [Note 6]. Where the Community Spouse might otherwise be impoverished by the cost of nursing home care, certain resources, known as a Community Spouse Resource Allowance (CSRA) are allocated for his or her protection. See 42 U.S.C. § 1396r-5(c). An income allowance is also available for low-income Community Spouses.

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