8144 Spousal Impoverishment Provisions - Under federal law, a married couple is allowed to protect a portion or all of their combined nonexempt resources and income when either the husband or wife requires care in a medical institution for at least 30 consecutive days, including situations in which the institutionalized spouse dies prior to the 30th day in the institution. As a result, such protected resources and income would not be considered in determining the medical eligibility of the institutionalized spouse. The law also provides for income to be protected for dependent family members and for the consideration of only the institutionalized spouse's own income in determining his or her eligibility beginning with the first month of institutionalization.

The following policies are only applicable in those instances in which one spouse lives in the community (including HCBS arrangements) and the other spouse resides in a medical institution. They do not apply to single individuals or to married couples where both members enter an institution or remain in the community. The resource provisions apply whether or not the facility the husband or wife enters is Medicaid approved. The income provisions apply only where the facility is Medicaid approved. In addition, the income provisions are not applicable to persons in adult care homes whose financial eligibility is determined based on the spenddown provisions of 8172.2 (2)(b).

Length of institutionalization must be at least 30 consecutive days, except in situations in which the institutionalized spouse dies prior to the 30th day. Verification of the length of stay is required. If the length of care will not exceed the month the care begins and the two following months, these provisions would not be applied based on using the temporary stay policy referenced in 8113 unless beneficial to the client for eligibility purposes, or the institutionalized spouse dies prior to the 30th day in the institution.

The spousal impoverishment provisions contained in this section shall be applicable to all legally married couples, including common-law and same sex marriages. The marriage relationship exists until legally terminated. Separated and legally separated couples continue to be married and therefore may divide assets and allocate income.

8144.1 Spousal Resource Provisions - The following provisions are applicable to the consideration of the couple's resources. The methods outlined to determine the community spouse resource allowance apply regardless of any other division of marital property. No adjustments will be made in the amount of the community spouse resource allowance, including divisions made through prenuptial and postnuptial agreements or court orders, unless it is ordered through the fair hearing process. A fair hearing officer may grant an increase to the community spouse resource allowance as outlined in 1619.

NOTE: The initial resource test provisions of 8141 shall apply in determining the eligibility of the institutionalized spouse if he or she entered the institution on or after September 30, 1989. If the institutional arrangement began prior to September 30, 1989 the provisions of 8142 (1) are applicable.

1. Community Spouse Resource Allowance - Based on the total combined nonexempt resources owned by the couple in the month of application, the community spouse resource allowance shall be the greater of the minimum allowance or one-half of the value of the couple’s nonexempt resources owned at the time the spouse first entered an institutional arrangement on or after September 30, 1989, not to exceed the maximum allowance.
    
    

2. Assessment Process - In order to determine the community spouse allowance, an assessment of the resources owned by the couple (either singly or jointly) at the time the Institutionalized spouse first entered long term care must be made. Resources which would have been counted at that time are to be considered regardless of their status at the time of application. If the total resources varied within this month, the highest value obtained during that month shall be used.
    

   The ES-3162 shall be used for this purpose. Either spouse can request such an assessment be made without a formal application for assistance. If the assessment is done without an application for assistance, the couple shall be informed of the outcome of the assessment including the total nonexempt resources which were considered and the community spouse's share of those resources based on the determination described above. A copy of the assessment form is also to be provided to the couple. The original is to be retained in the case file for use in determining eligibility at the time a formal application is filed. The couple does not have the right to a fair hearing concerning the assessment until the time a formal application is filed.
    

   If an application is not taken at the time of assessment, a "pseudo" application shall be registered in KEES to track the resource determination. The normal registration process would be used including the client's name, date of birth, and SSN. In addition, the case should be assigned to the MS program. Upon completion of the assessment and notification to the couple, the application shall be denied.  No formal denial notice would be sent. However, if the assessment shows there to be eligibility for the institutionalized spouse based on the community spouse resource allowance, a formal application shall be taken and processed at that time.
    

   If the individual has been in and out of an institutional arrangement since September 30, 1989, the first month of entrance which began after that date shall be used for assessment purposes. If the individual first entered a hospital and then goes directly into an adult care home, the month he or she first entered the hospital shall be used since the institutional arrangement has been continuous.
   
   Only nonexempt resources are to be considered. This would include such things as checking and savings accounts, land or buildings other than an exempted home, and life insurance with a face value of more than $1,500. Thus, any resources that are counted toward the allowable resource limits must be considered. (See 5000.) Exempted resources, such as the home and one automobile, would not be considered in determining the community spouse resource allowance.
   
   NOTE: The special treatment of resources contained in an available trust (5330 and 5430) does not apply to the assessment process. Trust resources shall be considered exempt or countable based on the non-trust treatment of assets. Therefore, a residence or primary vehicle contained in an available trust would be an exempt resource in determining the Community Spouse Resource Allowance. Those same trust assets would still be countable when determining the amount of resources available to the couple in the eligibility process.
    

   The couple will need to provide any necessary evidence to document the amount of resources owned at the time the applicant/recipient began long term care as well as those currently owned if an application is being made and a period of time has elapsed since the start of long term care.
                                                                                                                                                                                                                                                                                                                                              
   The minimum and maximum resource allowance limits are subject to change annually based on increases in the federal customer price index (CPI). Any increase in standards will only affect those who apply or request an assessment on or after the effective date of the increase. The resource standards in place at the time the assessment is actually calculated shall be used.                                                                                                                                                                           

The M-2 (Notice of Intent to Transfer Resources) shall be sent to the applicant for completion and return prior to determination of eligibility.  The form is designed to notify the applicant of the resource transfer process and of his/her obligation to make the necessary transfer(s) upon notice of approval.  By signing the form, the applicant agrees to make the transfer(s) based on the agency determination.  Either spouse may sign the form, but both spouses are encouraged to sign.  If the applicant fails to return the completed form, the application may be denied for failure to provide information.   

3. Implementation of the Resource Allowance and Transfer Provisions - Once the assessment process is completed, the amount of the community spouse resource allowance is then determined based on the parameters of item (1) above. This amount is then compared to the current total nonexempt resources of the couple to determine the amount of resources which can be protected.

If, based on the community spouse resource allowance, the institutionalized spouse is otherwise eligible, the couple must then transfer sufficient resources to the community spouse to equal the allowance if the combined resources are mostly jointly owned between the husband and wife or primarily owned solely by the institutionalized spouse. If such transfer does not occur, the resources will be considered for all months following the month of application based on ownership.

The agency shall notify the individual of the outcome of the resource assessment.  By earlier signing and returning the M-2  (Notice of Intent to Transfer Resources) form, the individual has already agreed to make the necessary transfer(s). The couple then has 90 days from the date of notification of approval to transfer the necessary resources to the community spouse. If there is no immediate eligibility, such notice is not required and the couple can pursue the necessary transfers prior to reapplying.

If the spouse in long term care is unable to help carry out the transfer or give his or her consent to the transfer because of disability, a period of up to one year is allowed for the community spouse to carry out the transfer. The spouse must seek court action (through conservatorship or other methodology) to gain authority to do so on behalf of the institutionalized spouse during this period. Documentation of this would be required.

The 90 day/1 year time periods referred to above can be further extended for good cause. Potential good cause reasons would include legal impediments which may prohibit liquidation of some property or extenuating circumstances beyond the control of either or both spouses that delay transfer activity such as an unexpected illness or hospitalization or untimely cooperation by a necessary third party (joint property owner, life insurance company, etc.). In such instances, the couple or spouse must continue to try to overcome these obstacles and present evidence of their attempts. The transfer period can then be extended for as long as necessary to complete the division. In such instances in which the transfer was not completed due to a legal impediment on a piece of property, once the impediment is overcome and the property becomes available, such property would then be subject to transfer pursuant to the determined community spouse resource allowance.

In order to transfer resources, the couple may be required to take such action as setting up separate savings accounts, changing ownership on titles and deeds, or liquidating property and dividing the proceeds. It is important that the spouses transfer resources in such a way that the resulting ownership interest of each spouse in the resources is clearly designated and separately identifiable. Once the property has been divided into separate shares, either spouse may have their name placed on the resource of the other for convenience purposes if their access to the property is limited to acting as an agent for the other spouse.

Documentation of how the transfer was carried out and any subsequent changes must be included in the case file.

4. Effect of Transfer Period on Eligibility - Resources owned solely by the community spouse should not be considered available to the institutionalized spouse beginning in the month following the month the institutionalized spouse is determined to be initially eligible (including prior eligibility). Resources to be transferred to the community spouse in accordance with his or her resource allowance shall be deemed to have been transferred during the 90 day/1 year transfer period described above. Eligibility could then be approved as early as the first month in the prior medical period if the institutionalized spouse is otherwise eligible.
   

   Case processing shall not be delayed because of the permitted transfer period as long as sufficient evidence is presented to determine that the transfer will result in eligibility. If the transfer will not result in eligibility because the client still has excess resources, eligibility must be denied and the record of the assessment and community spouse resource allowance will need to be retained in the case file for future application purposes. Such denial action can be taken immediately. The couple may then either complete the necessary transfers or wait until the institutionalized spouse's share is closer to the resource level for eligibility.
   

   For clients who are presumed eligible during the transfer period, if the couple does not follow through with the transfer within that period and does not have good cause for further extending the period, the case shall be closed as soon as possible giving timely and adequate notice. Payments made on behalf of the client up to that time shall not be regarded as overpayments. The case can be reopened if the couple later completes the transfer and provides all necessary information. However, the client would not be presumed eligible again and eligibility could be re-established beginning in the month the transfer is completed.

8144.2 Spousal Income Provisions - The following provisions are applicable to the consideration of the couple's income when one member enters a Medicaid approved facility.

1. Community Spouse Income Allowance - Based on the total nonexempt income of the couple, the community spouse allowance shall be determined as follows:

a. If their combined total nonexempt gross income (or adjusted gross for the self-employed) does not exceed the monthly minimum community spouse income allowance, the income can be made totally available to the community spouse.

b. If the combined total nonexempt gross income (or adjusted gross for the self-employed) is more than the monthly minimum community spouse income allowance, income sufficient enough to bring the spouse's gross income up to the monthly minimum allowance can be made available. The minimum allowance can be increased up to the monthly maximum community spouse income allowance if there are excess shelter expenses as defined below.

   
The budgeting methodologies described in 7100 shall be used to compute the income of both spouses. For self-employment, the adjusted gross income shall be computed in accordance with 7122.
 

c. If the applicant's/recipient's spouse has excess shelter expenses, the amount of the allowance can be increased up to the monthly maximum community spouse income allowance. Excess shelter expenses are defined in the law as the amount by which the spouse's monthly expense for rent, or mortgage payment (including principal, interest, taxes, and homeowner’s insurance), or in the case of a condominium or cooperative, monthly maintenance charges, when added to the food assistance standard utility allowance (SUA) exceeds 30% of the previously mentioned monthly minimum income allowance cap.  In instances in which utilities are included in the rental payment, the full rental payment shall still be used in computing the excess shelter allowance. Only the spouse's principal place of residence can be used to compute this allowance. 
 

Subtract the food assistance standard utility allowance (SUA) from 30% of the monthly minimum community spouse income allowance.  This amount is then subtracted from the allowable shelter expenses to determine the amount of the excess shelter expense.  The excess shelter expense is added to the monthly minimum community spouse income allowance to determine the new enhanced allowance, not to exceed the monthly maximum community spouse income allowance.
 

d. Only nonexempt income is to be considered in determining the allowance. This would include such income as Social Security, VA (other than aid and attendance benefits or amounts attributable to unusual medical expenses), or Railroad Retirement benefits, wages, income from investments, and other private retirements benefits. It would not include such income as SSI benefits, bona fide loans (not used for current living expenses), and tax refunds. Exempted income is not to be considered in determining the total income.
 

The amount of the community spouse allowance will vary based on changes in either spouse's income and changes in shelter expenses (including a change in the food assistance standard utility allowance). In addition, as with the community spouse resource maximum levels, the monthly maximum income allowance will be adjusted annually based on the percentage increase in the federal customer price index (CPI).
 

The amount of the allowance shall be reviewed and, if necessary, adjusted at the time of the annual review and cost of living increases. The client and/or his or her spouse must still report any changes in their income or shelter expenses within 10 calendar days of the change and the amount of the allowance would then need to be adjusted at the time of the reported change.
 

NOTE: If a court order has been entered against an institutionalized spouse for the support of the community spouse, the community spouse income allowance shall not be less than the monthly amount of the court order, even if it exceeds the monthly maximum income allowance. In addition, if a fair hearings officer has ruled that additional income is needed by the community spouse in instances of financial duress as referenced in 1619, the allowance shall equal that amount.
 

e. The M-3 (Notice of Intent to Allocate) shall be sent to the applicant for completion and return prior to determination of eligibility.  The form is designed to inform the applicant of his/her allocation options.  By signing the form the applicant agrees to the chosen allocation option. Either spouse may sign the form, but both spouses are encouraged to sign. This agreement shall be used to determine the amount of income allocation.  If the applicant fails to return the completed form, eligibility shall be determined without allowing any income allocation for either the community spouse or a dependent family member.

2. Dependent Family Member Allowance - Each dependent family member who lives with the community spouse can receive a monthly dependent family member income allowance equal to one-third of the monthly minimum community spouse income allowance from the institutionalized spouse as long as that member's gross monthly income does not exceed the minimum community spouse income allowance standard referenced in item 1 above. If the income is in excess of this standard, no income allowance can be provided to that member.
 

NOTE: For children under age 18 who do not live with a community spouse or where there is no community spouse, the allocation policy of 8143 (4) is applicable.
 

A family member is defined as a child, parent, or brother or sister of either spouse. Dependency may be of any kind (e.g., legal, financial, medical, etc.). The spouse's or dependent member's allegation shall be accepted without challenge unless there is a reason to question it.
 

The income of the family member to be considered for purposes of determining eligibility for the dependent family member allowance shall be based on the same guidelines as referenced for the community spouse income allowance. The income of a legally responsible person would not be considered in this determination, only the member's own income. As the amount of the allowance is based on a percentage of the minimum community spouse income allowance standard, it will be subject to change at the time of an increase in that minimum allowance amount. The dependent family member allowance is subject to termination if the member's income changes and exceeds the minimum community spouse income allowance standard.

The family member's income shall be reviewed at the time of the annual review. The client and/or family member is responsible for reporting any change in the member's income within 10 calendar days of the change if it exceeds the above-mentioned minimum income allowance standard.
 

3. Implementation of Allowances and Effect on Eligibility - The community spouse and dependent family member allowances are to be computed at the time of application or at the time the care arrangement begins for ongoing recipients by using the ES-3163.  The full permitted allowances are to be computed on this form even though the income of the institutionalized person may be insufficient to provide the full amounts. A copy of the form is to be provided to the client at the time of approval. Documentation of both spouse's income as well as the income of any dependent family member for whom an allowance will be provided is needed.
    

   It is not a requirement that an allowance be provided to either the spouse and/or family members. The institutionalized spouse has the choice to provide the full maximum allowance, a smaller portion of it, or nothing at all. For example, if the community spouse and/or dependent family members are also applying for or receiving assistance, an income allowance could adversely impact their eligibility and the institutionalized spouse may then want to provide nothing or an amount smaller than the maximum.  The choice made by the applicant on the M-3  (Notice of Intent to Allocate) shall be used for this purpose.   
    

   Upon receipt of M-3 (Notice of Intent to Allocate) form and approval of the case, the allowances shall be presumed to be made each month beginning with the month of application or the month in which the care arrangement begins for ongoing recipients. They would not be applied retroactively to any prior month. The allowances shall be deducted from the client's income each month in determining his or her obligation. The amount of the allowances shall continue to be deducted unless there are reported changes in income and/or shelter expenses which would alter or terminate the allowance or a change in the allowance limits caused by a CPI increase. The deducted amount shall also be adjusted if it becomes known that the computed allowances are not being made fully available. The case file is to be documented regarding any change.