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Spousal Impoverishment Protections for Married Couples where One Spouse is in a Managed Long Term Care Plan - Pooled Trusts Allowed as an Option

Views: 30377
Posted: 23 Apr, 2012
by Trilby De Jung (Empire Justice Center)
Updated: 18 Oct, 2016
by Valerie Bogart (New York Legal Assistance Group)

What are Spousal Impoverishment Rules?

Since 1998, a spouse of a nursing home resident on Medicaid is allowed to keep a reasonable level of income and resources to live on, while still permitting Medicaid payment for the nursing home resident's care.  Congress enacted the "spousal impoverishment protections" in 1988 in response to stories of elderly “community” spouses -- mostly women -- whose husbands were in nursing homes.  Medicaid required all of the husband's income to be paid to contribute to the cost of care.  Some  were practically starving.  Others sought divorces in order to escape the crushing financial burden.    An important sidelight of this legislation was that it permitted states to budget couples on home-and-community-based services (HCBS) "waiver" programs under these same income and asset rules, giving these couples a much-needed financial cushion. 

Which Married Couples Can Use Spousal Impoverishment Protections?

  • Since the 1980's, spouses of New Yorkers receiving services through the Lombardi long term home health care program and other waivers were entitled to spousal impoverishment protections.

  • When the Lombardi program was phased out between 2012 -2014, and all of its members were required to join Managed Long Term Care plans, the State agreed to give spousal impoverishment protections not just to married persons transitioning to MLTC from Lombardi, but to ALL married couples where one spouse receives MLTC services.

  • The expansion of spousal impoverishment protections to all couples where one spouse was enrolled in an MLTC plan was in part required by part of the Affordable Care Act called the PPACA,  which, effective January 1, 2014, required all States to expand  spousal impoverishment protections for all married couples with a spouse receiving Managed Long Term Care (MLTC) or other Home-and-Community-Based Services under a waiver --Traumatic Brain Injury (TBI), Nursing Home Transition and Diversion (NHTD), and OPWDD  waivers.  Click here for the exact language of the ACA -PPACE law on spousal impoverishment.

  • NEW July 2016: Spousal impoverishment protections are also available to consumers receiving immediate need personal care services pursuant to 16 ADM 02.  Procedures for accessing immediate need personal care services are outlined in this article.

What are the Spousal Impoverishment Protections for INCOME?  

The spouse receiving the MLTC or other waiver services may deduct from his/her income these allowances and deductions:

  1. SPOUSE -an amount to bring his or her spouse's income up to the "Minimum Monthly Maintenance Needs Allowance" (MMMNA).  In 2016, this is $2,980.50. The allowance provided to non-applying spouse is called a "community spouse monthly income allowance" (CSMIA).   The CSMIA is calculated by subtracting the non-applying spouse's own income and the monthly cost of his/her health insurance premiums from the MMMNA.

  2. Family member allowance (FMA), if applicable, is an allowance of $664 per dependent family member up to a maximum of $1992 (2016).  This is for minor children, dependent children of any age, or dependent parents (defined as having over 50% of their needs met by either spouse) 

  3. Personal needs allowance (PNA) for the waiver participant - This is $384 in 2016 (the difference between the regular Medicaid level for ONE PERSON and TWO PERSON households).

  4. Health insurance premium - may deduct the cost of his/her own Medigap and other insurance premiums.

The remainder after taking all of these deductions is the MLTC/waiver recipient's spend-down.   

EXAMPLE:    MLTC Spouse Sam Gross Income  = $2,264.50
Community Spouse Chris Gross Income = $1500.00
Both have Medigap policies that cost $200/month each.
LTC Spouse Sam's Gross income $2,264.50
 -- Personal Needs Allowance  PNA (Sam's Allowance) --$384.00
--  Sam's Medigap Medigap policy Premium  -- $200.00

Minimum Monthly Maintenance Needs Allowance MMMNA

$2,980.50
 -- Community Spouse Chris' Own Income --$1,500.00
 -- Community Spouse Monthly Income Allowance CSMIA
(this is amount from Sam's income that brings Chris'
income up to the MMNA)
$1,480.50 --$1,480.50
-- Chris' Own Medigap Medigap policy Premium -- $200.00
Sam's Net Income = Spend-down $0

What are the Spousal Impoverishment Protections for ASSETS or RESOURCES?  

The MLTC spouse may keep $14,850 in his/her own name (2016).  

PLUS the Community Spouse may have up to the greater of $74,820 (2014-16) or one-half of the couple's total combined assets up to $119,220 (2014-16).  This total includes the Community Spouse's own resources in his/her own name, plus any of the MLTC Spouse's own resources that exceed $14,850, plus any of their joint resources.  The MLTC applicant spouse must actually transfer his/her own individual and their joint resources that exceed the individual resource limit ($14,850 in 2016)  to the Community Spouse.

PLUS both spouses may have a burial fund, pre-paid funeral agreement, and an IRA or other retirement funds, provided that distributions are being taken, even if they are under age 70.5.    See Resource Disregards chart.  

The balance is deemed available to MLTC spouse for cost of care.  Rules are in NYS DOH MRG Resources Chapter at pp. 331 -335.

Do Spousal Impoverishment Income and Resource levels Apply at the time an individual applies for Medicaid and is seeking to enroll in MLTC?  

NOT INITIALLY UNLESS SEEKING IMMEDIATE NEED PERSONAL CARE SERVICES.  This is explained in 16 ADM 02. with procedures and tips here.

For all others who first apply for Medicaid in order to get MLTC, the local Medicaid program must first determine eligibility using regular Community Medicaid rules for income and assets, without the spousal protections.  The spousal impoverishment protections are only used "post-eligibility."  This means that initially, an applicant may have a large spend-down, even though he will not have a spend-down once he enrolls in an MLTC plan and requests spousal impoverishment budgeting.  On the initial Medicaid application, here are some tips for navigating the spend-down.

  • Community Spouse not applying for MLTC may consider submitting a "Spousal Refusal."  This means his or her income and assets will not be counted for the MLTC applicant's eligibility.  Beware that the county has the right to sue a "refusing spouse" for support - to recover the Medicaid funds paid for services when the refusing spouse refused.  However, if the MLTC applicant immediately enrolls in an MLTC plan and requests rebudgeting with spousal protections, there would be no Medicaid expenses for the county to recover in a support suit.  Here is the Spousal Refusal form used in NYC.  Other counties may have their own forms, or this form can be adapted. 

    • A spousal refusal can be used for the spouse's income and assets/resources.  At the time of application, the MLTC applicant spouse's countable resources must be brought down to the individual Medicaid asset level ($14,850 in 2015).  Any excess resources must be transferred to the community spouse during the month prior to the application.  Consult an elder law attorney if there are excess assets.

  • If the MLTC applicant has a spend-down  or "excess income" just counting his or her own income, even with the community spouse doing a "spousal refusal,"  be sure to make clear that the Medicaid applicant is seeking to enroll in MLTC and ask for eligibility CODE 06.  This should ensure that the application for Medicaid is not DENIED because they have not "met" the spend-down, by incurring medical bills equal to the spend-down.  Medicaid applicants who would have a spend-down must request CODE 06  so that an MLTC plan will see in the eligibility system that they are eligible.  See  NYS DOH GIS 2014 MA/10 -- 06 to 30 Conversion for MLTC Enrollees.   (May 5, 2014)  Otherwise, their Medicaid coverage does not become effective until they submit medical bills that meet the spend-down, according to complicated rules explained here  and on the State's website.   Many people applying for Medicaid to pay for long-term care services can't activate their Medicaid coverage until they actually begin receiving the services, because they don't have enough other medical bills that meet their spend-down.  This creates a catch-22, because they cannot start receiving MLTC services until Medicaid is activated.  Until their Medicaid is activated, the Medicaid computer is coded to show they are not eligible.  As a result, an MLTC plan could refuse to enroll them -- because they do not have active Medicaid.  Eligibility CODE 06 gives them "Provisional Medicaid" eligibility so that an MLTC plan sees they have Medicaid and will enroll them.   See Medicaid Alert dated July 12, 2012.   and see NYLAG Troubleshooting Guide re MLTC Enrollment Barriers.
  • In New York City and some other counties, MLTC plans are required to fax HRA a "conversion form and  package" to activate Medicaid when the consumer has a spend-down.  Download Conversion cover sheet here.- FORM HCSP-3022  Despite extensive education by HRA, many plans still fail to do this.

AFTER the Medicaid application is accepted and the individual has enrolled in an MLTC plan, request DSS/HRA to rebudget with Spousal Protections.  

You or the Plan can use the DOH  "Request for Assessment" form to request spousal budgeting (page 9 of this link)

In NYC, submit the form or a letter requested spousal impoverishment budgeting  to:

HRA--HCSP Central Medicaid Unit  

785 Atlantic Avenue, 7th Floor

Brooklyn, NY 11238

T: 929-221-0849

In March 2014, HRA published a Medicaid Alert regarding Spousal Impoverishment Budgeting for applicants/recipients in MLTC; which now must be modified in light of the August 2014 GIS.

What if the Spousal Impoverishment Protections Don't Help?

May a Married MLTC Recipient Still Use a Pooled Trust to Eliminate His/Her Spend-down?  

YES.   The State Dept. of Health has changed the answer to this question several times in the last few years.  Currently, since a new directive issued November 3, 2014, the answer is YES.  GIS 14 MA/025 - Spousal Impoverishment Budgeting with Post-Eligibility Rules Under the Affordable Care Act  (PDF)  A married person may CHOOSE to use EITHER Spousal Impoverishment budgeting OR regular Community Budgeting, which allows a pooled trust.   GIS 14 MA/025 states, "Spousal impoverishment budgeting with post-eligibility rules is not mandated for married individuals receiving home and community-based services (HCBS) pursuant to a waiver under Section 1915(c) of the Social Security Act or through enrollment in a managed long term care (MLTC) plan..." 

The new directive rescinds an earlier  NYS DOH GIS 14 MA/015, issued August 5, 2014, and reinstates two even earlier directives,   Pending further clarification from the federal CMS, "districts are to resume applying the policy provided in  GIS 12 MA/013, "Spousal Impoverishment Budgeting with Post-Eligibility Rules for Individuals Participating in a Home and Community-Based Waiver Program" and NYS DOH GIS 13 MA/018,  "Spousal Impoverishment and Transfer of Assets Rules for Certain Individuals Enrolled in Managed Long Term Care." These GIS messages provide for spousal impoverishment budgeting with post-eligibility rules only when it is more advantageous to the applicant. 

This directive was the result of advocacy by the NYS Bar Association Elder Law Section.

  • When are Spousal impoverishment Protections  Unfavorable, so Applicant would do Better using a Pooled Trust?

Spousal protections can be unfavorable if the individual still has a high spend-down even after the spousal impoverishment allowances are allocated.  Such an individual would normally want to use a supplemental needs trust in order to reduce his or her spend-down.  

Example of circumstances when spousal protections are NOT favorable and Better to use Pooled Trust.   Change the EXAMPLE above  so that community spouse Chris' income was not $1500 but was $3000.     Chris would not be entitled to any Community Spouse Monthly Income Allowance (CSMIA) because Chris' own income  would be equal to or more than the Minimum Monthly Maintenance Needs Allowance (MMNA).  In that case, the MLTC Spouse Sam would have the option of using community budgeting based just on his own income as follows.  Community Spouse Chris' Income Does Not Count.  Use Medicaid income level for ONE.   GIS 12 MA/013

Chris' Income    COMMUNITY SPOUSE   $3,000.00
Minimum Monthly Maintenance Needs Allowance (MMNA).  $2,980.50
Community Spouse Monthly Income Allowance (CSMIA) -
None since income above MMMA
$0

Sam's Gross income   APPLICANT $2,264.50
 -- $20 Standard Disregard (only used in Community Budgeting) --$20.00
--  Sam's Medigap Medigap policy Premium  -- $200.00
-- Medicaid income level for ONE (2015) --$825.00
Excess Income = Spend-down - May Deposit in Pooled Trust $1219.5

Sam applies without Chris' income.  Uses income level as SINGLE PERSON per  GIS 12 MA/013

  • What State Policy was Rescinded by GIS 14 MA/025? ?

The August 2014 directive NYS DOH GIS 14 MA/015 that is now rescinded had required use of the spousal impoverishment protections even when they were unfavorable.     But under the State's interpretation from August 2014, these married individuals were not allowed to use a supplemental needs trust.  The State's view was that the spousal impoverishment protections are used in "post-eligibility budgeting" which is the same budgeting used in nursing homes.  Just as one cannot reduce one's NAMI in a nursing home by depositing excess income into a pooled trust, the State's view was that married individuals in an MLTC plan cannot reduce their spend-down by using a pooled trust.  ("NAMI" is Net Available Monthly Income - the name for "spenddown" for people in nursing homes on Medicaid).

Suffolk County was the only county, to our knowledge, that had already rebudgeted married MLTC recipients.  Couples  with combined gross income exceeding about $3300/ month  were impacted.   If the MLTC recipient was using a pooled trust, Suffolk DSS had told them they were no longer allowed to use the trust and budgeted them with a high spend-down that must be paid to the MLTC plan.  All of these individuals should now be rebudgeted and allowed to use the pooled trusts. 

The new directive reinstates two previous GIS directives -- NYS DOH GIS 13 MA/018 and GIS 12 MA/013 to the extent that they gave married individuals receiving MLTC or other HCBS waiver services an OPTION of choosing NOT to use the spousal impoverishment protections, if it was more favorable for the couple not to use them.  It could be more favorable NOT to use the protections if a married MLTC recipient instead used a pooled trust to eliminate his or her Medicaid spend-down.  Even if s/he would otherwise have a very high spend-down, by using a pooled trust, she qualifies for Medicaid and MLTC without any spend-down.  Even though the spousal impoverishment protections may reduce the spend-down, they may not eliminate it altogether if the individual's or spouse's income is high enough.  

Past History of Spousal Impoverishment Protections in New York State -
2006 Threat to End the Protections

SInce they were first available in 1988, New York State has always exercised the option of applying the spousal impoverishment protections to the flagship Lombardi program (long term home health care program) and other waivers.   The continued use of spousal impoverishment protections was thrown into doubt in 2006, when, under the Bush Administration, CMS held up renewal of New York's Lombardi waiver, reversing its policy of 20 years and insisting that New York drop the spousal protections. CMS re-interpreted federal regulations to prohibit the spousal protections in waiver programs, restricting them to nursing home care.

The dispute between NYS and CMS over spousal protections reached at least a temporary resolution in 2010 after the national health reform law, section 2404 of the Patient Protection and Affordable Care Act (PPACA) mandated that all waiver programs nationally must include spousal impoverishment beginning in June 2014 through 2019.   This law amends 42 USC 1396r-5(h)(1)(A) to define “institutionalized spouse” -- whose spouse is eligible for the impoverishment protections -- to include individuals who are eligible for HCBS waiver services.  Posted at p. 205 of this link and see excerpt copied below. 

Although this mandate didn't take effect until January 2014, in 2010 NYS was able to reach agreement with CMS under its 1115 Partnership plan extension to permit spousal impoverishment protections to continue in the Lombardi program.  See GIS 10 OLTC/003.   The Lombardi program, however, is  being phased out.  Current Lombardi program participants in the mandatory MLTC counties have been required to enroll in an MLTC plan if they are dual eligibles.  Thus continuation of the spousal impoverishment protections for MLTC was critical.   As first implemented by NYS under GIS 12 MA/013, participants in the Lombardi, TBI or NHTD waiver programs, who have a community spouse must have eligibility determined under spousal impoverishment budgeting only if it was advantageous to the recipient. 

Section 2404 of the Patient Protection and Affordable Care Act (PPACA) 

SEC. 2404. PROTECTION FOR RECIPIENTS OF HOME AND COMMUNITY- BASED SERVICES AGAINST SPOUSAL IMPOVERISHMENT.

“During the 5-year period that begins on January 1, 2014, section 1924(h)(1)(A) of the Social Security Act (42 U.S.C. 1396r–5(h)(1)(A)) shall be applied as though ‘‘is eligible for medical assistance for home and community-based services provided under subsection (c), (d), or (i) of section 1915, under a waiver approved under section 1115, or who is eligible for such medical assistance by reason of being determined eligible under section 1902(a)(10)(C) or by reason of section 1902(f) or otherwise on the basis of a reduction of income based on costs incurred for medical or other remedial care, or who is eligible for medical assistance for home and community-based attendant services and supports under section 1915(k)’’ were substituted in such section for ‘‘(at the option of the State) is described in section 1902(a)(10)(A)(ii)(VI)’’.

LEGAL CITATIONS and FORMS.  

For more information

See webinar of NY Metropolitan Elder Law Institute, a project of UCS Trust Services, "Pooled Trusts and the Changing MLTC Landscape - Special Issues for Married Couples, by Valerie Bogart, recorded May 18, 2016 (Also discusses other budgeting strategies to reduce the spend-down, including the housing disregard for those discharged from NH or Adult Home, and pooled trusts generally.

                      

Attached files
file 16adm2.pdf (324 kb)
file LDSS-4346 Institutionalized Spouse Budget Worksheet 1995.pdf (67 kb)
file Medicaid Alert Re Spousal Impv Budgeting 3-2014.pdf (153 kb)
file MAP-2161 Spousal Refusal combined.pdf (172 kb)
file Troubleshooting - 4-16-15 pp.pdf (2.11 mb)

Also read
document List of Pooled SNTs in New York State
document Medicaid Personal Care or Home Attendant Services
document Medigap (Medicare Supplemental) Policies and Rates in New York State - with Rate Tables for the Current Year
document How to use funeral planning to become eligible for Medicaid (updated fact sheet - 2015)
document Transfer of Asset Rules in Medicaid -- The Deficit Reduction Act of 2005
document Step-by-step guide to enrolling in a pooled income trust for Medicaid spend-down
document Medicaid Spend-Down
document Nursing Home Medicaid Coverage - Basic Financial Eligibility Rules about Income, Resources, and Spousal Protections
document Medicaid Resource and Income Disregards
document Managed Long Term Care
document Medicaid Home-and-Community-Based Waiver Programs in New York State
document Special Income Standard for Housing Expenses: If Discharged from Nursing Homes or Adult Homes and Enroll in MLTC Plan

Also listed in
folder Medicaid -> Financial Eligibility

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