Implications of the Expiration of Medicaid Long-Term Care Spousal Impoverishment Rules for Community Integration

Issue Brief
  1. National LTSS expenditures totaled $364.9 billion, including spending on residential care facilities, nursing homes, home health services, HCBS waivers, ambulance providers, and some post-acute care. Medicare post-acute care spending ($81.5 billion) is excluded. LTSS payers include Medicaid (52%), other public and private insurance (20%), out-of-pocket spending (16%), and private insurance (11%). All HCBS waivers are attributed to Medicaid. KFF estimates based on 2017 National Health Expenditure Accounts data from CMS, Office of the Actuary.

    ← Return to text

  2. U.S. Dep’t of Health & Human Servs. Office of the Asst. Sec’y for Planning & Evaluation, Spouses of Medicaid Long-Term Care Recipients (April 1, 2005), https://aspe.hhs.gov/basic-report/spouses-medicaid-long-term-care-recipients.

    ← Return to text

  3. The rules also apply to long-term care in other medical institutions besides nursing homes. 42 U.S.C. § 1396r-5. The rules apply to stays of at least 30 consecutive days. 42 U.S.C. § (h)(1)(B).

    ← Return to text

  4. Specifically, states could opt to apply the rules to individuals who are eligible for Medicaid by reason of a Section 1915 (c) HCBS waiver, under 42 U.S.C. § 1396a (a)(10)(A)(ii)(VI) (describing individuals who would be eligible under the Medicaid state plan if institutionalized, meet an institutional level of care, and would be institutionalized if not receiving waiver services, sometimes referred to as the “217-group,” because they also are described in 42 C.F.R. 435.217). 42 U.S.C. § 1396r-5 (h)(1)(A).

    ← Return to text

  5. Under the ACA, Section 2404 was set to expire on December 31, 2018. Congress subsequently extended it through March 2019, Medicaid Extenders Act of 2019, § 3, Pub. L. No. 116-3 (Jan. 24, 2019), https://www.congress.gov/bill/116th-congress/house-bill/259, then through September 2019, Medicaid Services Investment and Accountability Act of 2019, § 2, Pub. L. No. 116-16 (April 18, 2019), https://www.congress.gov/bill/116th-congress/house-bill/1839/, and most recently, through December 2019, Sustaining Excellence in Medicaid Act of 2019, Pub. L. 116-39 (Aug. 6, 2019).

    ← Return to text

  6. This brief is not an exhaustive discussion of Medicaid LTSS financial eligibility rules. Additionally, other topics such as asset transfers and estate recovery are beyond the scope of this brief.

    ← Return to text

  7. To be eligible for SSI, beneficiaries must have low incomes, limited assets, and an impaired ability to work at a substantial gainful level as a result of old age or significant disability.

    ← Return to text

  8. Section 209 (b) allows states to apply Medicaid eligibility rules that are more restrictive than the SSI rules, as long as the state’s rules are no more restrictive than they were in 1972, when SSI was created, and provided that the state allows SSI beneficiaries to establish Medicaid eligibility through a spend-down. 42 U.S.C. § 1396a (f).

    ← Return to text

  9. 42 U.S.C. § 1396a (a)(10)(ii)(V).

    ← Return to text

  10. Kaiser Family Foundation, Medicaid Financial Eligibility Survey for Seniors and People with Disabilities (June, 2019), https://www.kff.org/report-section/medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-findings-from-a-50-state-survey-issue-brief/

    ← Return to text

  11. 42 U.S.C. § 1396a (a)(10)(ii)(VI); 42 C.F.R. § 435.217.

    ← Return to text

  12. 42 U.S.C. § 1396a (q); 42 U.S.C. § 1396r-5 (d)(1). When determining PETI under the spousal impoverishment rules, additional deductions are permitted for minor or dependent children, dependent parents, or dependent siblings of either spouse who reside with the community spouse, 42 U.S.C. § 1396r-5 (d)(1)(C), and expenses incurred for medical or remedial care for the institutionalized spouse, 42 U.S.C. § 1396r-5 (d)(1)(D), in addition to the community spouse monthly income allowance discussed in Key Question 2.

    ← Return to text

  13. 42 U.S.C. § 1396a (q)(2); see also Kaiser Family Foundation, Medicaid Financial Eligibility Survey for Seniors and People with Disabilities (June, 2019), https://www.kff.org/report-section/medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-findings-from-a-50-state-survey-issue-brief/

    ← Return to text

  14. 42 C.F.R. § 435.726 (c).

    ← Return to text

  15. 42 U.S.C. § 1396r-5 (a)(1). The rules permit (and sometimes require) that a married individual seeking Medicaid LTSS whose spouse is not institutionalized is treated differently for financial eligibility purposes than other individuals seeking Medicaid LTSS. 42 U.S.C. § 1396r-5 (a)(2).

    ← Return to text

  16. U.S. Dep’t of Health & Human Servs., Office of the Asst. Sec’y for Planning & Evaluation, Spouses of Medicaid Long-Term Care Recipients (April 1, 2005), https://aspe.hhs.gov/basic-report/spouses-medicaid-long-term-care-recipients.

    ← Return to text

  17. CMS, Dear State Medicaid Director Letter #15-001, ACA#32, Affordable Care Act’s Amendments to the Spousal Impoverishment Statute (May 7, 2015), https://www.medicaid.gov/federal-policy-guidance/downloads/smd050715.pdf.

    ← Return to text

  18. Genworth 2019 Cost of Care Survey (Oct. 28, 2019), https://www.genworth.com/aging-and-you/finances/cost-of-care.html.

    ← Return to text

  19. Medicaid.gov, Spousal Impoverishment, last accessed Oct. 28, 2019, https://www.medicaid.gov/medicaid/eligibility/spousal-impoverishment/index.html.

    ← Return to text

  20. Id.

    ← Return to text

  21. U.S. Dep’t of Health & Human Servs., Office of the Asst. Sec’y for Planning & Evaluation, Spouses of Medicaid Long-Term Care Recipients (April 1, 2005), https://aspe.hhs.gov/basic-report/spouses-medicaid-long-term-care-recipients.

    ← Return to text

  22. The rules also apply to states providing Medicaid under a Section 1115 waiver, to the same extent that the rules would apply if the state instead used state plan authority, 42 U.S.C. § 1396r-5 (a)(4)(A), and to PACE programs, 42 U.S.C.§ 1396r-5 (a)(5).

    ← Return to text

  23. 42 U.S.C. § (h)(1).

    ← Return to text

  24. 42 U.S.C. § (h)(1)(B).

    ← Return to text

  25. Id.

    ← Return to text

  26. These rules are subject to additional exceptions not discussed in this summary.

    ← Return to text

  27. 42 U.S.C. § 1396r-5 (b)(1).

    ← Return to text

  28. 42 U.S.C. § 1396r-5 (b)(2)(A)(i). Separate rules apply to treatment of trust income. 42 U.S.C. § 1396r-5 (b)(2)(B).

    ← Return to text

  29. 42 U.S.C. § 1396r-5 (b)(2)(A)(ii).

    ← Return to text

  30. The minimum MMNA can be increased if either spouse establishes that it does not provide adequate income to the “community spouse,” “due to exceptional circumstances resulting in significant financial duress.” 42 U.S.C. § 1396r-5 (e)(2)(B).

    ← Return to text

  31. The minimum MMNA may be increased if a “community spouse” has “excess shelter costs.” 42 U.S.C. § 1396r-5 (d)(2), (3); Medicaid.gov, 2019 SSI and Spousal Impoverishment Standards, last visited Oct. 30, 2019, https://www.medicaid.gov/medicaid/eligibility/downloads/spousal-impoverishment/ssi-and-spousal-impoverishment-standards.pdf.

    ← Return to text

  32. 42 U.S.C. § 1396r-5 (d)(3)(C); Medicaid.gov, 2019 SSI and Spousal Impoverishment Standards, last visited Oct. 30, 2019, https://www.medicaid.gov/medicaid/eligibility/downloads/spousal-impoverishment/ssi-and-spousal-impoverishment-standards.pdf.

    ← Return to text

  33. 42 U.S.C. § 1396r-5 (c)(1).

    ← Return to text

  34. The “community spouse” may retain additional assets if either spouse establishes that the assets retained in the CSRA do not generate enough income to meet the minimum MMNA. 42 U.S.C. § 1396r-5 (e)(2)(C).

    ← Return to text

  35. Medicaid.gov, 2019 SSI and Spousal Impoverishment Standards, last visited Oct. 28, 2019, https://www.medicaid.gov/medicaid/eligibility/downloads/spousal-impoverishment/ssi-and-spousal-impoverishment-standards.pdf.

    ← Return to text

  36. 42 U.S.C. § § 1396r-5 (c)(2)(B), (f)(2)(A). For additional explanation of these provisions, see U.S. Dep’t of Health & Human Servs., Office of the Asst. Sec’y for Planning & Evaluation, Spouses of Medicaid Long-Term Care Recipients (April 1, 2005), https://aspe.hhs.gov/basic-report/spouses-medicaid-long-term-care-recipients.

    ← Return to text

  37. 42 U.S.C. § 1396r-5 (c)(4).

    ← Return to text

  38. See supra., n.4.

    ← Return to text

  39. For example, states may include in their HCBS waivers individuals eligible for Medicaid under the state plan option to cover seniors and people with disabilities up to 100% of the federal poverty level (FPL, $12,160 for an individual in 2018) to offer services that are not provided under the state plan benefit package.

    ← Return to text

  40. Julie Stone, Medicaid Eligibility for Persons Age 65+ and Individuals with Disabilities: 2009 State Profiles (Congressional Research Service, June 28, 2011), https://www.everycrsreport.com/files/20110628_R41899_a16a92dedbbe0c214803f55b35db14fd4f7ac861.pdf.

    ← Return to text

  41. Section 2404 does not require actual receipt of HCBS waiver services and thus allows an individual to obtain state plan Medicaid eligibility, by applying the spousal impoverishment rules, if the individual qualifies for but will not actually receive HCBS waiver services upon enrollment due to a waiver waiting list. CMS Informational Bulletin, Sunset of Section 2404 of the Affordable Care Act, Relating to the Spousal Impoverishment Rules for Certain Home and Community-Based Services Applicants and Recipients (Nov. 9, 2018), https://www.medicaid.gov/federal-policy-guidance/downloads/cib110918-2.pdf.

    ← Return to text

  42. CMS notes that states providing HCBS under Section 1115 waivers who wish to continue to apply the spousal impoverishment rules after Section 2404 expires may need to seek a waiver amendment to do so. CMS Informational Bulletin, Temporary Extension of the Affordable Care Act’s Spousal Impoverishment Provision for Married Recipients of Home and Community-Based Services (Feb. 8, 2019), https://www.medicaid.gov/federal-policy-guidance/downloads/cib020819.pdf; see also CMS Informational Bulletin, Additional Temporary Extension of the Spousal Impoverishment Rules for Married Applicants and Recipients of Home and Community-Based Services (Sept. 4, 2019), https://www.medicaid.gov/federal-policy-guidance/downloads/cib090419.pdf; CMS Informational Bulletin, Additional Extension of the Spousal Impoverishment Rules for Married Applicants and Recipients of Home and Community-Based Services (May 8, 2019), https://www.medicaid.gov/federal-policy-guidance/downloads/cib050819.pdf; CMS Informational Bulletin, Sunset of Section 2404 of the Affordable Care Act, Relating to the Spousal Impoverishment Rules for Certain Home and Community-Based Services Applicants and Recipients (Nov. 9, 2018), https://www.medicaid.gov/federal-policy-guidance/downloads/cib110918-2.pdf.

    ← Return to text

  43. Id.

    ← Return to text

  44. Id.

    ← Return to text

  45. The 40 states include 38 responding yes for § 1915 (c) waivers and two states (AZ and VT) responding not applicable; these two states do not offer any § 1915 (c) waivers and instead provide all HCBS through a § 1115 waiver that already authorizes application of the spousal impoverishment rules. The five states with unknown plans are AK, KS, MI, TX, and UT. The remaining six states (IL, ME, MA, NH, NY, and NC) did not respond to this survey question.

    ← Return to text

  46. AK, CA, CT, FL, KS, MI, MO, ND, OR, PA, TX, UT, WA, and WI.

    ← Return to text

  47. AZ, DE, HI, IA, NJ, NM, RI, TN, VT, and WA.

    ← Return to text

  48. AR, CO, CT, FL, GA, LA, MD, MS, NE, OH, OR, SD, VA, and WY.

    ← Return to text

  49. AK, CA, ID, IN, KS, KY, MI, MO, MT, ND, NY, PA, SC, TX, UT, and WI. The remaining 8 states (DC, IL, ME, MA, MN, NH, NC, and WV) did not respond to this survey question.

    ← Return to text

  50. The remaining three states (DE, DC, and MS) did not respond to this survey question.

    ← Return to text

  51. The remaining state (NY) did not respond to this survey question.

    ← Return to text

  52. CA, ID, LA, MI, MO, MT, NV, NH, NY, OH, OK, PA, TX, and UT.

    ← Return to text

  53. CA, ID, MI, MO, MT, NH, NY, OH, OK and PA.

    ← Return to text

  54. CA, ID, LA, TX and UT.

    ← Return to text

  55. CA, MI, NV, NY, and OH.

    ← Return to text

  56. CA, LA, MN, MT, OH, and UT.

    ← Return to text

  57. CA, CT, MN, MT, and UT.

    ← Return to text

  58. CA.

    ← Return to text

  59. FL and WA.

    ← Return to text

  60. See, e.g., Kaiser Family Foundation, Streamlining Medicaid Home and Community-Based Services: Key Policy Questions (March, 2016), https://www.kff.org/medicaid/issue-brief/streamlining-medicaid-home-and-community-based-services-key-policy-questions/.

    ← Return to text

  61. Kaiser Family Foundation, Olmstead’s Role in Community Integration for People with Disabilities Under Medicaid: 15 Years After the Supreme Court’s Olmstead Decision (June 2014), http://kff.org/medicaid/issue-brief/olmsteads-role-in-communityintegration-for-people-with-disabilities-under-medicaid-15-years-after-the-supreme-courts-olmstead-decision/.

    ← Return to text

  62. Id.; see also Kaiser Family Foundation, Medicaid Home and Community-Based Services: Results from a 50-State Survey of Enrollment, Spending, and Program Policies (Jan. 2018), https://www.kff.org/medicaid/report/medicaid-home-and-community-based-services-results-from-a-50-state-survey-of-enrollment-spending-and-program-policies/ (updated report forthcoming).

    ← Return to text

  63. $9 million in FY 2019, $7 million in FY 2020, and $7 million in FY 2021. Congressional Budget Office, H.R. 259 Medicaid Extenders Act of 2019 cost estimate (Jan. 11, 2019), https://www.cbo.gov/system/files/2019-01/hr259.pdf.

    ← Return to text

  64. Congressional Budget Office, H.R. 1839 Medicaid Services Investment and Accountability Act of 2019 Cost Estimate (March 22, 2019), https://www.cbo.gov/system/files/2019-03/hr1839_0.pdf.

    ← Return to text

  65. Congressional Budget Office, H.R. 3253 Empowering Beneficiaries, Ensuring Access, and Strengthening Accountability Act of 2019 Preliminary Cost Estimate (as introduced on June 13, 2019), https://www.cbo.gov/system/files/2019-06/hr3253.pdf.

    ← Return to text

  66. Since § 2404 took effect, CMS has asked states to indicate in their § 1915 (c) waiver applications and renewals whether they intend to apply the rules to the 217-group if § 2404 expires. CMS Informational Bulletin, Sunset of Section 2404 of the Affordable Care Act, Relating to the Spousal Impoverishment Rules for Certain Home and Community-Based Services Applicants and Recipients (Nov. 9, 2018), https://www.medicaid.gov/federal-policy-guidance/downloads/cib110918-2.pdf.

    ← Return to text

  67. CMS indicates that it will work with states to expedite these waiver approvals. States could seek waivers to apply the rules to some but not all of these populations. These waivers would be approved using expenditure authority and would be subject to federal budget neutrality rules. Id.

    ← Return to text

The Henry J. Kaiser Family Foundation Headquarters: 185 Berry St., Suite 2000, San Francisco, CA 94107 | Phone 650-854-9400
Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270

www.kff.org | Email Alerts: kff.org/email | facebook.com/KaiserFamilyFoundation | twitter.com/kff

Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in San Francisco, California.