How Spousal Impoverishment Rules Protect a Community Spouse

People are often worried about Medicaid guidelines. They stress over whether or not their loved ones will be eligible.

One very common concern involves a scenario where there is a community spouse. This means that one spouse has been institutionalized for care while the other spouse stays home in the community. Because Medicaid has precise rules regarding the amount of income and assets an applicant may retain, spouses are often concerned that they will be left without a source of income so that their partner can be eligible for Medicaid - a situation known as spousal impoverishment. Some of the common questions include the following:

• When applying for Medicaid for my spouse, can I keep my house?

• How much of my savings can I keep for myself and still have my spouse approved for Medicaid benefits?

• May I keep my spouse’s Social Security check and pension?

• Is my money and my spouse’s money considered one pool for Medicaid purposes? Or can they be separated?

These are very common concerns when only one spouse requires Medicaid. In this article, Senior Planning Services explores how spousal impoverishment law provides for community spouses and offers answers to questions you may have in case only you or your partner requires Medicaid support. 

Key Takeaways on Community Spouse and Spousal Impoverishment

• A community spouse is a spouse who remains at home in the community when their partner requires Medicaid long-term care. 

• Spousal Impoverishment protections were put in place, so community spouses can retain income and assets, even when a partner is on Medicaid.

• A community spouse who has an income under the Minimum Monthly Maintenance Needs Allowance is entitled to some or all of their spouse's income.

• The Community Spouse Resource Allowance is the amount of assets a community spouse may retain when an institutionalized partner is present. This amount differs by state. 

Medicaid Spousal Impoverishment Rules

Before spousal impoverishment protections were put in place, couples often had to spend nearly all their savings and income to qualify for Medicaid, leaving the community spouse (the spouse not in care) with little financial support. To avoid such a scenario, spousal impoverishment rules were instituted to allow the community spouse to keep a certain portion of the couple’s assets and income so they can maintain a basic standard of living while Medicaid helps cover the institutionalized spouse’s long-term care costs. 

Minimum Monthly Needs Allowance

In cases where a community spouse has an income that does not meet the Minimum Monthly Maintenance Needs Allowance (MMMNA), they are allowed to retain some or all of their partner’s income. Currently, the federal MMMNA stands at $2,643.75, with a maximum monthly amount of $4,066.50. Though most states use these figures, they are free to set their own amounts within these limits, and some states have a higher MMMNA. 

The Community Spouse Resource Allowance

The Community Spouse Resource Allowance (CSRA) is the portion of a married couple’s countable assets that the spouse living at home (the community spouse) is allowed to keep when the other spouse qualifies for Medicaid long-term care coverage. Many states allow the community spouse to keep 50% of the couple’s assets when one spouse enters long-term care, but some states allow the community spouse to keep 100% of the assets, up to the maximum amount set by federal law. Currently, the maximum CSRA is $162,660, and the minimum is $32,532. 

Community Spouse Resource Allowance by State

Though most states operate under the 50% rule, some states allow spouses to keep 100% worth of their assets up to the federal limit, and some set their own boundaries within the federal limits. Here is a chart detailing the policies of individual states.

At Senior Planning, we provide guidance and assistance to families and seniors in several states.

Can I Keep My Home if My Spouse is Institutionalized Under Medicaid?

In most cases, a community spouse can keep the couple’s home when the other spouse qualifies for Medicaid long-term care coverage. Medicaid generally treats the home as an exempt asset if the spouse living in the community continues to reside there, meaning its value is not counted toward Medicaid’s asset limits. However, specific rules and conditions can vary by state. 

Does Medicaid Allow for the Expenses of a Community Spouse? One Couple’s Story 

Sue and Ed are a couple who came to Senior Planning for help with such a problem. They married in the late nineteen fifties, settled in NJ, and owned their home in Monmouth County for the last half century.

They both earn money every month through their social security and pension benefits. Although Sue’s income is very small, they have always managed financially because Ed’s Social Security and two pensions total over $3,700 monthly.

When Ed fell for the third time and broke his collarbone, he was hospitalized and then transferred to a local nursing facility in Monmouth County, New Jersey.

The couple worried that their $70,000 in savings would be depleted quickly because Ed would be in the facility for an extended period. The $70,000 they had in savings was accruing a low interest rate in two separate savings accounts. One account was in Ed’s name, while the other was in Sue's. They also had a modest checking account that was used for their living expenses. There were no life insurance policies, CDs, or annuities.

The business office at the nursing home advised Sue that she would need to “spend down” and then apply for Medicaid benefits. 

How Senior Planning Guided the Community Spouse

We got the call from Sue in November. Sue was frantic. By that time, her husband's care had already drained their savings to $40,000, and Ed still needed to be cared for in the nursing home. In fact, it was unlikely that he would be able to leave.

Sue was concerned about losing her savings and worried that all of Ed’s income would have to be paid to the nursing home to meet Medicaid eligibility requirements. 

At Senior Planning, we calmed her down and explained that spousal impoverishment protections would ensure that, as a community spouse, she would not be left destitute.  She would be able to keep half of their assets based on the “snapshot” date, which meant she could keep up to $35,000. The snapshot date analysis would be based on their complete financial situation as of the first day Ed was institutionalized. We also confirmed that she could continue to live in her home.

Sue was very frightened that she would lose Ed’s income, but there are times when a community spouse may keep some or all of the other spouse’s income.

Based on variables such as Sue's shelter expenses and her own monthly income, we determined that a large part of Ed’s income would continue to go to her. Sue was comforted with the knowledge that she would retain enough income to continue living independently and that we would manage the entire Medicaid application for her. We obtained the maximum dollar amount she was entitled to, so she could spend time with Ed without worrying about finances. 

Get Help at Senior Planning with Spousal Impoverishment Protections

At Senior Planning Services, our experienced caseworkers guide families and educate seniors on the Medicaid application process.  If you are feeling overwhelmed by the Medicaid application process and unsure about what you are entitled to, reach out to us. We will support you through the application process and ensure you retain the maximum amount you are allowed. 

Frequently Asked Questions on Community Spouses

What is a Community Spouse?

A community spouse is the spouse of a person entering a nursing home who continues to live at home and is legally allowed to keep a portion of the couple’s assets and income to prevent financial hardship.

What is the CSRA?

The Community Spouse Resource Allowance (CSRA) is the amount of assets a healthy spouse can keep when the other spouse qualifies for Medicaid long-term care. U.S. federal law sets limits that states adjust yearly. 

How to apply for Spousal Impoverishment?

Applying for spousal impoverishment protections is essentially done through the Medicaid application process for the spouse entering a nursing home. You must provide the required paperwork to be eligible for maximum benefits.