Understanding the Medicaid Spousal Impoverishment Protections in Colorado
In the case of a married couple, when one spouse is applying for Medicaid long term care or HCBS benefits and the other spouse is not receiving HCBS or PACE services or residing in a long term care facility, federal law provides special resource and income protection for the spouse not applying for benefits. Under these Spousal Impoverishment Protection rules, the spouse who will receive Medicaid long term care or HCBS benefits is called the "institutionalized spouse" and the spouse not receiving benefits is called the "community spouse."
In particular, the Colorado Medicaid regulations provide as follows:
10 C.C.R. 2505-10, 8.100.7.K.
Spousal Protection - Treatment of Income and Resources for Institutionalized Spouses
The spousal protection regulations apply to married couples where one spouse is institutionalized or likely to be institutionalized for at least 30 consecutive days and the other spouse remains in the community. Being a community spouse does not prohibit Medicaid eligibility if all criteria are met. The community spouse resource allowance does not supersede the Medicaid eligibility criteria.
For purposes of spousal protection, an institutionalized spouse is an individual who:
a. Begins a stay in a medical institution or Long Term Care institution nursing facility on or after September 30, 1989, or
b. Is first enrolled as a Medical Assistance client in the Program of All Inclusive Care for the Elderly (PACE) on or after October 10, 1997, or
c. Receives Home and Community Based Services on or after July 1, 1999; and
d. Is married to a spouse who is not in a medical institution or nursing facility; but does not include any such individual who is not likely to meet the requirements of subparagraphs 8.100.7.K.2.a thru c for at least 30 consecutive days.
A person is considered likely to remain in a medical institution, Long Term Care institution, enrolled in the PACE program, or receiving HCBS when, at the beginning of the institutionalization there is a reasonable expectation, based on medical evidence, that he/she will remain institutionalized for at least 30 consecutive days.
A community spouse is defined as a spouse who is the spouse of an institutionalized spouse.
The Community Spouse Resource Allowance (CSRA)
In cases of married couples, the community spouse can retain a certain amount of countable resources without affecting the institutionalized spouse’s Medicaid eligibility. The amount retained is called the Community Spouse Resource Allowance (CSRA). The CSRA equals the total of the couple’s resources and is in addition to both the $2,000 the institutionalized spouse is entitled to retain and the exempt resources discussed above. For 2013, the CSRA cannot be more than $115,920. Therefore, the institutionalized spouse is eligible for Medicaid when the couple’s total countable resources are equal to or less than the CSRA plus the $2,000 the institutionalized spouse is entitled to retain.
Transfers Between Spouses. In addition to determining which assets are not counted, it is important to know that transfers between spouses are not penalized. Consequently, removal of the institutionalized spouse’s name from all of the assets is recommended for the following reasons: First, once Medicaid eligibility is established, the couple is given until the next redetermination period to remove the institutionalized spouse’s name from CSRA property. Second, once Medicaid eligibility is established, joint treatment of both spouses’ resources ends in the first full month after such establishment. Third, the community spouse is advised to change his or her will to leave any inheritance to the institutionalized spouse in a document that will minimize the adverse effect to the institutionalized spouse's Medicaid eligibility. This document is called an Elective Share Will with a Testamentary Special Needs Trust. If the community spouse does not change his or her will, the institutionalized spouse will often inherit all of the community spouse’s estate. If the size of the inheritance is greater than $2,000, Medicaid would cease for the institutionalized spouse because he or she would have resources in excess of the Medicaid resource cap. An Elective Share Will with a Testamentary Special Needs Trust allows the institutionalized spouse to protect a portion of the community spouse’s estate and allows for a shorter period of ineligibility.
Minimum Monthly Maintenance Needs Allowance (MMMNA)
The MMMNA is the amount the community spouse needs to pay for his or her basic needs within the community. Medicaid sets limits on this amount:
Basic Allowance: $1,939
(as of July 1, 2013)
Plus Excess Shelter Allowance: House Payment/Rent plus Maintenance Fee plus Insurance plus Taxes plus Utilities (actual or $568, whichever is larger up to a maximum of $959)
Equals the MMMNA (But the MMMNA cannot exceed $2,898 in 2013)
Monthly Income Allowance (MIA)
The MIA is the amount of institutionalized spouse’s income that is contributed to the community spouse if his or her income does not equal the MMMNA (MMMNA – the community spouse’s income = MIA).
If the MIA amount is not sufficient to increase the community spouse's income to the MMMNA amount, the community spouse may request an increase in his or her CSRA. The institutionalized spouse's income must be applied first to determine if there can be an increase in the CSRA. This "income first" rule, which has long been applied in Colorado, is now mandated in all states under the DRA.
The amount of the increase in the CSRA is measured by the cost of a commercial, irrevocable, immediate annuity that will make monthly payments equal to the amount by which the community spouse's monthly income, after inclusion of the MIA, falls short of the MMMNA. However, the community spouse is not required to use the increase in the CSRA amount to actually purchase such an annuity.