Post-Eligibility Treatment of the Institutional Spouse’s Income

As eligibility is being determined, if the Community Spouse’s monthly income falls below the Minimum Monthly Maintenance Needs Allowance (“MMMNA”), then MCCA contemplates two methods of raising her income up to the MMMNA. First, a portion of the Institutionalized Spouse’s income may be transferred to her to bring her income up to the MMMNA. Second, the CSRA may be increased by an amount sufficient to purchase additional income for the Community Spouse. Each process would take place at the same time as or after the Institutionalized Spouse is determined eligible for Medicaid.

MCCA protects low income Community Spouses by providing for an income allowance that potentially diverts some or all of the Institutionalized Spouse’s income to a low-income Community Spouse. If the Community Spouse’s separate income is less than a minimum amount ($2,177.50 per month as of July 1, 2021), then a portion of the Institutionalized Spouse’s income called the Community Spouse Monthly Income Allowance is diverted to the Community Spouse to bring her monthly income up to the Minimum Monthly Maintenance Needs Allowance. If the Community Spouse has housing expenses, an excess housing allowance (up-to $653.25 in 2021) is also diverted to the Community Spouse pursuant to 42 U.S. Code § 1396r–5(d)(4). Some States such as Georgia and other maximum-maximum States allow a higher income allowance for low-income Community Spouses ($3,435.00 in 2022).

42 U.S. Code § 1396r–5(d) provides:

(1) Allowances to be offset from income of institutionalized spouse
After an institutionalized spouse is determined or re-determined to be eligible for medical assistance, in determining the amount of the spouse’s income that is to be applied monthly to payment for the costs of care in the institution, there shall be deducted from the spouse’s monthly income the following amounts in the following order:

(A) A personal needs allowance (described in section 1396a(q)(1) of this title), in an amount not less than the amount specified in section 1396a(q)(2) of this title.
(B) A community spouse monthly income allowance (as defined in paragraph (2)), but only to the extent income of the institutionalized spouse is made available to (or for the benefit of) the community spouse.
(C) A family allowance, for each family member, equal to at least ⅓ of the amount by which the amount described in paragraph (3)(A)(i) exceeds the amount of the monthly income of that family member.
(D) Amounts for incurred expenses for medical or remedial care for the institutionalized spouse (as provided under section 1396a(r) of this title).

[Emphasis added]

In subparagraph (C), the term “family member” only includes minor or dependent children, dependent parents, or dependent siblings of the institutionalized or community spouse who are residing with the community spouse.

(2) Community spouse monthly income allowance defined
In this section (except as provided in paragraph (5)), the “community spouse monthly income allowance” for a community spouse is an amount by which—

(A) except as provided in subsection (e), the minimum monthly maintenance needs allowance (established under and in accordance with paragraph (3)) for the spouse, exceeds
(B) the amount of monthly income otherwise available to the community spouse (determined without regard to such an allowance).

(3) Establishment of minimum monthly maintenance needs allowance

(A) In general
Each State shall establish a minimum monthly maintenance needs allowance for each community spouse which, subject to subparagraph (C), is equal to or exceeds—

(i) the applicable percent (described in subparagraph (B)) of 1⁄12 of the income official poverty line (defined by the Office of Management and Budget and revised annually in accordance with section 9902(2) of this title) for a family unit of 2 members; plus
(ii) an excess shelter allowance (as defined in paragraph (4)).
A revision of the official poverty line referred to in clause (i) shall apply to medical assistance furnished during and after the second calendar quarter that begins after the date of publication of the revision.

(B) Applicable percent
For purposes of subparagraph (A)(i), the “applicable percent” described in this paragraph, effective as of—

(i) September 30, 1989, is 122 percent,
(ii) July 1, 1991, is 133 percent, and
(iii) July 1, 1992, is 150 percent.

(C) Cap on minimum monthly maintenance needs allowance
The minimum monthly maintenance needs allowance established under subparagraph (A) may not exceed $1,500 (subject to adjustment under subsections (e) and (g)).

(4) Excess shelter allowance defined
In paragraph (3)(A)(ii), the term “excess shelter allowance” means, for a community spouse, the amount by which the sum of—

(A) the spouse’s expenses for rent or mortgage payment (including principal and interest), taxes and insurance and, in the case of a condominium or cooperative, required maintenance charge, for the community spouse’s principal residence, and
(B) the standard utility allowance (used by the State under section 2014(e) of title 7) or, if the State does not use such an allowance, the spouse’s actual utility expenses,
exceeds 30 percent of the amount described in paragraph (3)(A)(i), except that, in the case of a condominium or cooperative, for which a maintenance charge is included under subparagraph (A), any allowance under subparagraph (B) shall be reduced to the extent the maintenance charge includes utility expenses.

(5) Court ordered support
If a court has entered an order against an institutionalized spouse for monthly income for the support of the community spouse, the community spouse monthly income allowance for the spouse shall be not less than the amount of the monthly income so ordered.

(6) Application of “income first” rule to revision of community spouse resource allowance
For purposes of this subsection and subsections (c) and (e), a State must consider that all income of the institutionalized spouse that could be made available to a community spouse, in accordance with the calculation of the community spouse monthly income allowance under this subsection, has been made available before the State allocates to the community spouse an amount of resources adequate to provide the difference between the minimum monthly maintenance needs allowance and all income available to the community spouse.

The amount of income diverted to a low-income Community Spouse, the Community Spouse Monthly Income Allowance, is determined under 42 U.S. Code § 1396r–5(d)(2) as the difference between the CS’s actual monthly income and the MMMNA. The MMMNA is calculated as 150 percent of the poverty level for a two-person household. In addition, the Community Spouse may qualify for an excess shelter allowance if her combined housing and utility expenses exceed 30 percent of the MMMNA. The MMMNA can be increased to a maximum level which, in 2021, is $3,259.50.

After accounting for deductions permitted under 42 U.S. Code § 1396r–5(d)(1), the Institutionalized Spouse’s remaining income is applied toward the payment of his nursing home expense. bills. This means Medicaid is a “cost-share” program, at least with regard to the applicant‘s income.

If there is insufficient marital income to fully fund the Community Spouse Monthly Income Allowance, 42 U.S. Code § 1396r–5(e)(2)(C) provides:

If either such spouse establishes that the community spouse resource allowance (in relation to the amount of income generated by such an allowance) is inadequate to raise the community spouse’s income to the minimum monthly maintenance needs allowance, there shall be substituted, for the community spouse resource allowance under subsection (f)(2), an amount adequate to provide such a minimum monthly maintenance needs allowance.

Returning to Example 3 above, if Kevin goes into the nursing home and Sally’s income is less than the MMMNA, Sally will want want a CSMIA that brings her income up to the MMMNA. In doing so, Sally would be better off if additional resources were set aside for her to generate income instead of having Kevin’s income diverted to her. The reason is that Kevin’s income (Social Security and pension) may terminate at his death. The effect of lost monthly income becomes more dramatic where Sally’s life expectancy exceeds Kevin’s significantly. The purchase of additional income was the subject of Wisconsin Department of Health and Family Services v. Blumer, 534 U.S. 473, 478 (2002). In Blumer, the Community Spouse argued she should be allowed to use excess countable resources to purchase an income stream rather than having a portion of her husband’s assets transferred to her to bring her income up to the MMMNA. She argued that MCCA requires a resource first analysis when the CSRA is enhanced to generate additional monthly income to fund the CSMIA. Wisconsin argued that an income first analysis is appropriate. The difference between the two is as follows:

Income First

“Under the income-first method, ‘community spouse’s income’ is defined to include not only the community spouse’s actual income at the time of the 1396r-5(e) hearing, but also a potential post-eligibility income transfer from the institutionalized spouse.” Blumer, at 484.

Resources First

“The resources-first method, by contrast, excludes [post-eligibility transfers] from consideration. ‘Community spouse’s income’ under that approach includes only income actually received by the community spouse at the time of the 1396r-5(e) hearing, not any anticipated post-eligibility income transfer from the institutionalized spouse pursuant to § 1396r-5(d)(1)(B). If the community spouse’s income so defined will fall below the MMMNA, the CSRA will be raised to reserve additional assets sufficient to generate income meeting the shortfall, whether or not [a transfer of income from the Institutionalized Spouse] could also accomplish that task.” Id., at 484.

The Community Spouse in Blumer argued that the resources first method is required under MCCA and that the State could not force her to use an income first approach. Unfortunately, the Supreme Court found that MCCA does not mandate one approach over another and that either may be used. Since Blumer, the Deficit Reduction Act of 2005 was enacted and it requires an income first method.

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