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Lindsay C. Jones
Schraff Thomas Law LLC
(440) 569-1505
NAELA News Journal - NAELA News Online

The Importance of Avoiding Spousal Impoverishment with HCBS

By Lindsay C. Jones, Esq.
Published January 2019

NAELA successfully advocated for an extension of the spousal impoverishment protections for Medicaid’s home and community-based services. Here is what that means to your practice.

A flurry of legislative action has recently centralized around Medicaid’s community-based long-term care program, known as home and community-based services (HCBS).1 Unlike Medicaid’s institutional long-term care program, HCBS waiver programs serve to provide necessary services to individuals living in the community, including homes and assisted living facilities.2

As part of a critical push, NAELA advocated for the extension of spousal impoverishment protections for HCBS recipients; on January 25, 2019, the President signed a 3-month extension of the guarantee that Medicaid’s spousal impoverishment protections will apply to HCBS. This extension will end as of March 31, 2019. At that time, states will no longer be required to provide such protections to HCBS recipients. The actual impact will differ from state to state, as states do have the authority to develop their own HCBS waiver program(s), within the context of very broad federal guidelines.3

Protecting the Community Spouse
When Medicaid was signed into law in 1965,4 the intention was to provide financial assistance to individuals in need of institutionalized care, who met limited income and asset requirements. However, state standards failed to account for the financial needs of the individual’s spouse. These concerns were first addressed by the Medicare Catastrophic Coverage Act of 1988 (MCCA).5 Though the MCCA itself was ultimately repealed,6 its spousal impoverishment protections survived and were codified at 42 U.S.C. 1396r-5. Today, these provisions are referred to as the Spousal Impoverishment Rules (SIR).7

The original intent of SIR was to protect a portion of a married couple’s income and assets, to provide for the community spouse’s living expenses. Consequently, SIR has two main impact points.8 First, when determining eligibility, states must disregard the community spouse’s income, and must also disregard certain resources as part of the Community Spouse Resource Allowance (CSRA). Second, post-eligibility, a Monthly Income Allowance (MIA) must be calculated; in many circumstances, MIA permits a portion of the institutionalized spouse’s income to be allocated to the community spouse, to be used for their ongoing living expenses.

In the absence of SIR, the combined assets and income of the married couple are attributed entirely to the institutionalized spouse, effectively resulting in ineligibility or in the absolute impoverishment of the community spouse. It is SIR, not original Medicaid, which permits the institutionalized spouse to receive appropriate care, while simultaneously permitting the community spouse to retain assets and income sufficient for their reasonable living expenses.

SIR has been required for Medicaid’s institutional care program since 1988; for HCBS, however, it was only optional9 (and actually unavailable outside of the 217-group,10 without a Section 1115 waiver).11 Fortunately, circumstances have changed significantly since 1988. As America’s elderly population continues to expand, so too does the popularity and beneficial impact of HCBS programs. In fact, in 2013, for the first time in Medicaid’s history, the majority of Medicaid spending was spent for HCBS (not institutional care).12 Over the last decade, the growing importance of HCBS has led to a renewed legislative focus on the program and its functionality.

States Required to Apply SIR to HCBS Only Through 2018
Section 2404 of the Patient Protection and Affordable Care Act of 2010 (ACA)13 took effect in 2014, thereby amending section 1924(h)(1)(A) [42 U.S.C. 1396r-5(h)(1)(A)] of the Social Security Act. This effectively removed the phrase “at the option of the State,” thereby requiring states to apply SIR to HCBS waiver programs. Application was also required to be made on a broad basis (including medically needy/spend down pathways and Section 1115 waivers, not just the 217-group). In response, CMS issued State Medicaid Director Letter No. 15-001 (SMD #15-001),14 providing critical state guidance.

This amendment was limited to a 5-year period (January 1, 2014 to December 31, 2018) – hence the flurry of legislative action in late 2018. As of January 25, 2019, the Medicaid Extenders Act has been signed into law, providing for the 3-month extension (ending March 31, 2019). Should a long-standing solution fail to be implemented, CMS has issued an informational bulletin (CIB HCBS Sunset) to identify the expected fallout.15 It is imperative to take into consideration the potential consequences this will have in states which have not yet implemented formal procedures, or that do not intend to continue to apply SIR to HCBS (in whole, or in part).

Increased Impact on One-Half CSRA States
For my state of Ohio, the SIR requirement for HCBS (as interpreted by SMD #15-001) has been of particular benefit. As a one-half CSRA state, Ohio’s community spouses do not simply retain the maximum federal CSRA standard. This is true, even when SIR is applied.

Instead, a spousal share (equal to one-half of the total value of both spouses’ countable resources) is calculated, using resource values established as of the first day of the “first continuous period of institutionalization.” Essentially, the community spouse can retain up to one-half of the couple’s total countable resources, valued as of the first day of the month in which their spouse entered a hospital and/or nursing home for a continuous period. The one-half share is capped at the federal CSRA maximum and must be at least equal to the federal CSRA minimum. Without a continuous period, there can be no one-half CSRA calculation; without the one-half CSRA calculation, there can be no protected one-half spousal share. With HCBS (quite literally a home and community-based program), the requirement of a continuous period can create an inherent impossibility, as the goal of both spouses is to remain in the community (not to enter a hospital or nursing facility).

A Catch-22 Situation
Prior to SMD #15-001, this impossibility resulted in a catch-22 situation. For Ohio, the outcome was that SIR served only to protect the federal CSRA minimum. Married couples were thus left with three basic choices: 1) the community spouse could spend down to the federal CSRA minimum; 2) the spouse in need of care could go without appropriate care; or 3) the spouse in need of care could enter a nursing facility (thereby establishing a continuous period, permitting the CSRA calculation to be completed and protecting additional resources for the community spouse). Based on 2019 SIR standards, this had the potential to cost a community spouse up to $101,136.00.16

With the SIR requirement for HCBS (as interpreted by SMD #15-001), this catch-22 has been short-circuited. Rather than requiring a continuous period for the one-half CSRA calculation, there are two basic requirements: 1) the individual must indicate a need for HCBS, by requesting HCBS coverage (verbally, or in writing); and 2) the individual must meet the clinical standard for the HCBS program. The HCBS coverage request date then serves as the date on which resource values are established, for the one half CSRA calculation. This permits the married couple to safeguard their federally appropriate spousal share.17 Otherwise, the calculation would be delayed; in the interim, the couple’s ongoing expenses (such as medical bills and home maintenance) would continue to lower the value of the couple’s total countable resources, thereby lowering the ultimate value of the community spouse’s one-half share.

Requirement of Clinical Standard Only
Notably, SMD #15-001 also requires the spouse in need of care to be “eligible for” HCBS, meaning that they must meet the “nonfinancial eligibility requirements;” it then limits the state’s HCBS assessment to the determination of whether or not the applicant meets the waiver’s clinical standard (i.e., requires an appropriate level of care).

The “clinical standard” requirement is key, as state assisted living HCBS programs have their own “non-financial eligibility” requirements; in Ohio, as with most states, those program requirements effectively require the applicant to occupy a “Medicaid bed.” For applicants who are in immediate need of HCBS services, this requirement makes eminent sense. For an applicant requesting HCBS services simply to trigger a CSRA calculation, it is ineffective.

A Two-Step Process for One-Half CSRA States
The CSRA calculation simply serves to identify the one-half spousal share; actual spend down will not yet have occurred, and the applicant will not yet be financially eligible for HCBS benefits. Consequently, private payments for in-home care or assisted living facility expenses would continue. For that reason, this process is often referred to as the “two-application” method, whereby the first application (meaning, the initial request) permits the CSRA calculation to occur, and the second application serves to confirm spend down and trigger actual HCBS services.

Protect State Flexibility for HCBS Program Development
The application of SIR to HCBS (especially for states with one-half CSRA calculations) is of critical importance. However, the inherent flexibility of HCBS programs must also be considered, as the application of SIR has had, for certain limited programs, a detrimental impact in several states. The most prominent example of this is Minnesota, which originally used a “deeming waiver” to provide spousal protections to certain HCBS programs (such as brain injury, for applicants under the age of 65).18

With the deeming waiver, only the income and assets of the applicant spouse were considered; further, an applicant spouse could transfer excess assets to the community spouse without penalty. Following the mandatory application of SIR, excess assets could still be transferred – but only up to the federal CSRA maximum. In response, Minnesota ultimately took steps to reset the state CSRA standard at the federal maximum (opting out of the one-half calculation) and established additional hardship waivers.19 Specific language has also been included in section 3(b)(1) of the Medicaid Extenders Act of 2019, to better address these noted concerns.

The Future of SIR Application to HCBS
Medicaid’s long-term care program has had 30 years to identify and implement cohesive policies and procedures that protect community spouses from absolute impoverishment. The HCBS program has had only 5 years. In the short-term, NAELA will continue to advocate for a multi-year, or permanent, extension of the guarantee that Medicaid’s spousal impoverishment protections will apply to HCBS. Over the long-term, as states continue to take steps to identify and implement appropriate policy procedures, and as Congress continues to search out viable solutions to the financing of long-term care, advocacy on this subject matter will continue to be a priority.

1 See the EMPOWER Care Act, the Protecting Married Seniors From Impoverishment Act, the IMPROVE Act, and the Medicaid Extenders Act of 2019.

2, Home & Community Based Services Authorities, (accessed Jan. 30, 2019).

3, Home & Community-Based Services 1915(c), (accessed Jan. 30, 2019).

4 Title XIX of the Social Security Act.

5 Title XIX of the Social Security Act was amended by section 303(a) of the MCCA, to include resource protections pursuant to section 1924(c) and income protections pursuant to section 1924(d).

6 New York Times, Retreat in Congress; The Catastrophic-Care Debacle - A special Report.; How the New Medicare Law Fell on Hard Times in a Hurry (Oct. 9, 1989)

7, Spousal Impoverishment, (accessed Jan. 30, 2019).

8 Currently, the Minimum Monthly Maintenance Needs Allowance standard (for most states) is $2,057.50, with a Maximum of $3,160.50. The Minimum Community Spouse Resource Allowance standard is $25,284.00, with a Maximum of $126,420.00. The minimum standards serve to protect spouses from impoverishment in states which require a CSRA and/or MMMNA calculation, as well as in states that do not require a calculation but that have a state standard below the federal maximum and above the federal minimum; in some states, the community spouse will simply be entitled to the maximum standard. See, 2019 SSI and Spousal Impoverishment Standards, (accessed Jan. 30, 2019).

9 This is likely due, at least in part, to the fact that HCBS had only been made available 5 years prior to the MCCA, when Congress added section 1915(c) to the Social Security Act in 1983.

10 Cornell Law School, 42 CFR § 435.217 - Individuals receiving home and community-based services, (accessed Jan. 30, 2019).

11 Henry J Kaiser Family Foundation, Potential Changes to Medicaid Long-Term Care Spousal Impoverishment Rules: States’ Plans and Implications for Community Integration (Nov. 14, 2018)

12, Medicaid & CHIPStrengthening Coverage, Improving Health (Jan. 2017, p. 23),

14, State Medicaid Director Letter No. 15-001 (May 7, 2015)

15, CMCS 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)

16 Which is the difference between the federal CSRA Maximum and Minimum, for 2019.

17 See OAC 5160:1-6-4(E)(5)(iii) as example; in application, the provision is modified pursuant to the policies of the Ohio Department of Medicaid, to retain consistency with the ACA and SMD #15-001. In consequence, the term “non-financial requirements” is read as “clinical standard.” Currently, this is based on policy only, not on implementation of a formalized procedure or revision of state code.

18 Minnesota Department of Human Services, Corrected #16-21-04: DHS Explains Changes in the Implementation of Spousal Impoverishment Protections (Oct. 2, 2016)

19 Similar steps can be taken in additional states, and should be taken into consideration with advocacy efforts.

About the Author
Lindsay C. Jones, Esq., is an attorney with the law firm of Schraff Thomas Law, LLC in Willoughby Hills, Ohio, and is active in NAELA’s Ohio Chapter.