“Spousal Impoverishment” Budgeting for Managed Long Term Care

by David Goldfarb Goldfarb Abrandt Salzman & Kutzin LLP

New York will apply Medicaid “spousal impoverishment” budgeting rules for home care under the Managed Long Term Care (MLTC) program.

New York’s laws on spousal impoverishment budgeting, New York Social Services Law § 366-c(2)(a), was amended in 2013 to include for the purposes of budgeting under the definition an “institutionalized spouse” a person who is receiving care, services and supplies under the Managed Long Term Care (MLTC) Program to the extent that federal financial participation is available therefor. 2013 N.Y. Laws Ch. 56, Part A, § 68. The law had previously been amended to apply to other community-based waiver programs (2009 N.Y.Laws Ch. 58, Part D, § 42).

Couples, where one person is receiving Medicaid home care through the Managed Long Term Care program, will now be able to use the “spousal impoverishment” budgeting rules.  On Sept. 24, 2013, the New York State Department of Health announced in GIS 13 MA/018 that “spousal impoverishment protections” are available to married participants in all Managed Long Term Care (MLTC) plans, including PACE and Medicaid Advantage Plus plans.

Please note: GIS 14 MA/15 (08/15/2014) had rescinded GIS 13 MA/018 and stated that spousal impoverishment rules must be used. However GIS 14 MA/025 (11/3/2014) reverses the rescission!

These rules were previously expanded to the Traumatic Brain Injury (TBI) and Nursing Home Transition and Diversion (NHTD) waiver programs and had previously been applied to the “Lombardi Program” (Long Term Home Health Care Program). See GIS 12 MA/013, which explains the methodology for calculating spousal impoverishment budgeting in Home and Community-Based Waiver Programs.

These “spousal impoverishment protections” have been used since 1988 by couples where one spouse is in a nursing home. Under these rules income can be shifted from the spouse receiving Medicaid to the well spouse to bring his or her income up to a Minimum Monthly Maintenance Allowance (MMMNA) ($2,980.50 in 2015). However, in community-based programs the Medicaid spouse can keep a calculated personal needs allowance (PNA) (in 2015 $384). GIS 12 MA/013 explains the methodology for calculating the personal needs allowance: The PNA for a community-based or waiver recipient is the difference between the two-person and one-person income levels. In 2015 it is $384 ($1,209 minus $825).

It is necessary to determine how much in addition to the recipient’s PNA can be shifted to the spouse. You need to calculate the Community Spouse Monthly Income Allowance (CSMIA), which is the difference between MMMNA and the Community Spouse’s net income. For example, if the Community Spouse’s gross income from pension, Social Security and Minimum Required Distribution from an IRA is $2,000 per month and he or she has a $240 deduction for Medicare Supplemental Insurance, the CS’s net income is $1,760 ($2,000 minus $240) and the CSMIA is $1,220.50 (MMMNA $2,980.50 – $1,760). Therefore, in addition to the CS’s income the couple gets to keep $1,604.50 (PNA $383 + CSMIA $1,220.50). Or, for example, if the Applicant/Recipient’s income (after deduction for Medicare Supplemental Insurance) is $2,000, then the A/R keeps $384, and he shifts $1,220.50 to the CS and his remaining Medicaid spenddown is $395.50.

Alternatively under single-person budgeting the A/R could have kept only his or her single person PNA of $825 plus a $20 disregard and his spenddown would have been $1,155 ($2,000 – $845). A pooled trust cannot be used with spousal impoverishment budgeting.  GIS 14 MA/15 (08/15/2014) applies budgeting with “post-eligibility rules,” which may be read as precluding the use of a pooled trust for income.

According to the Department of Health, the Applicant/Recipient can decide which budgeting methodology is more favorable (an individual budget with the use of the pooled trust) or a spousal impoverishment budget without the use of the pooled trust.

Spousal impoverishment rules are to be applied to the couple’s resources. In 2015 the A/R may keep $14,850 in his own name. As for the CS, the minimum resource allowance is $74,820. However, it is unknown how the maximum would be calculated since it is one-half of the combined resources “as of the first day of institutionalization” up to a maximum (for 2015) of $119,220. Of course, in community-based care there is no first day of institutionalization. Other resource exemptions apply.

The rules are complex and there are advantages and disadvantages. Generally, according to the GIS, if the sum of the recipient’s Personal Needs Allowance ($825 in 2015), Community Spouse Monthly Income Allowance (Difference between MMMNA and the Community Spouse’s net income) and a Family Member Allowance, if applicable, is less than or equal to the sum of the Medicaid income level for a household of one and the $20 unearned income disregard, spousal impoverishment budgeting with post-eligibility rules is not more advantageous. In cases where the spousal impoverishment budgeting will eliminate a spenddown and eliminate the use of a pooled trust, it may be more advantageous.

New York Medicaid Attorneys

Don’t make a mistake with Medicaid eligibility, contact a New York elder law attorney with knowledge of Medicaid law.  Goldfarb Abrandt Salzman & Kutzin LLP is a law firm that handles New York Medicaid cases.

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A version of this article appeared in the  NYSBA Elder and Special Needs Law Journal, Winter 2014, Vol. 24,  No. 1