Potential Changes to Medicaid Long-Term Care Spousal Impoverishment Rules: States’ Plans and Implications for Community Integration

To financially qualify for Medicaid long-term services and supports (LTSS), an individual must have a low income and limited assets. In response to concerns that these rules could leave a spouse without adequate means of support when a married individual needs LTSS, Congress created the spousal impoverishment rules in 1988. Originally, these rules required states to protect a portion of a married couple’s income and assets to provide for the “community spouse’s” living expenses when determining nursing home financial eligibility, but gave states the option to apply the rules to home and community-based services (HCBS) waivers.

Section 2404 of the Affordable Care Act (ACA), changed the spousal impoverishment rules to treat Medicaid HCBS and institutional care equally from January 2014 through December 2018. Congress subsequently extended Section 2404 through March 2019. This issue brief answers key questions about the spousal impoverishment rules, presents 50-state data from a 2018 Kaiser Family Foundation survey about state policies and future plans in this area, and considers the implications if Congress does not further extend Section 2404. Findings include:

  • As of 2018, 50 states were applying the spousal impoverishment rules to HCBS waivers.
  • Five states plan to stop applying the spousal impoverishment rules to some or all of their HCBS waivers if Section 2404 expires. Specifically, Arkansas and Illinois plan to scale back by applying the rules to some but not all HCBS waivers. Minnesota would not apply the rules to some HCBS waivers but has a separate Section 1115 waiver addressing spousal deeming. Maine and New Hampshire do not plan to apply the rules to any HCBS waivers. Forty-five states plan to continue to apply the rules to all HCBS waivers, and Montana was undecided at the time of the survey.

If Congress does not further extend Section 2404, the spousal impoverishment rules will revert to a state option for HCBS waivers and will no longer apply to HCBS provided under other authorities, unless states obtain a Section 1115 waiver, as of April 1, 2019. Continuing to extend Section 2404 temporarily may create confusion for beneficiaries and increase administrative burden as states must redetermine eligibility using the pre-2014 rules and notify individuals of any changes in advance of each expiration date. If reauthorized, the rules would provide stability for enrollees receiving HCBS and states. Failing to reauthorize the rules could slow or begin to reverse states’ progress in expanding access to HCBS.

Issue Brief