Wednesday, October 19, 2016

Medicaid's Spousal Impoverishment Allowances for 2017



The cost of care in a nursing home can devastate the lifetime savings of a married couple. In recognition of this problem Congress passed a law in 1988 which was intended to limit the "spousal impoverishment" that can result when one spouse becomes a nursing home resident.  
Under this Medicaid law, minimum amounts of financial resources and income are protected for a spouse who is still living in the community. These protected amounts are adjusted each year to account for inflation. The adjustments are based on a Labor Department measure of inflation.   
In October of each year the Labor Department publishes the consumer price index for all urban consumers, all items, U.S. city average (the CPI-U) for the month of September. Using that figure it is possible to calculate the Medicaid 2017 Community Spouse minimum and maximum resource allowances and maximum income allowance.

What are Community Spouse Resource and Income Allowances?

In general, when your spouse is in a nursing home or needs assistance with home care under a Medicaid Waiver program (like Pennsylvania’s Aging Waiver program) he or she will not qualify for Medicaid benefits until your combined financial resources are reduced to a certain level. That permitted level of so-called “available resources” varies depending on your financial circumstances.

Where one spouse is in a nursing facility the general rule is that the community spouse can keep ½ of the amount of available resources that were owned by the couple on the date of admission to the nursing facility. However, this standard protected “Community Spouse Resource Allowance” is subject to a ceiling and a floor. My projection of the  ceiling and floor amounts for 2017 are set out below.

In addition to being allowed to keep the resource allowance, the community spouse is also entitled to have a certain level of income called the Monthly Maintenance Needs Allowance. This income allowance is also subject to a ceiling and a floor. If the community spouse does not have the required level of income, that spouse may be allowed to keep some of the institutional spouse’s income. If the income diverted from the institutionalized spouse is still insufficient, the community spouse may be able to keep additional resources.

What are the Resource and Income Allowances for 2017?

Although the 2017 figures have not yet been formally announced by the Centers for Medicare and Medicaid Services (CMS), by law they are based on the consumer price index for all urban consumers published by the Bureau of Labor Statistics (the CPI-U) for September of the prior year. The CPI-U for September of 2016 has now been released. This allows me to provide readers with my unofficial calculation of the community spouse resource and maximum income allowance for next year.

In 1988, the Medicaid law established the initial community spouse resource allowance at levels of $12,000 minimum and $60,000 maximum for 1989 based on the CPI-U for September 1988. The initial maximum income allowance was set at $1,500. The law provides that these levels be increased by the same percentage as the percentage increase in the CPI-U between September 1988 and the September before the calendar year involved.
The 2017 Allowances

The CPI-U for September 1988 was 119.8. The CPI-U for this September (September 2016) was 241.428 or higher by a factor of 2.015 [241.428/119.8= 2.015] This allows me to project that the spousal protection allowance figures for 2017 will be as follows:   
 
Minimum Community Spouse Resource Allowance for 2017 = $24,180.
Maximum Community Spouse Resource Allowance for 2017 = $120,900.*
Maximum Community Spouse Monthly Income Allowance for 2017 = $3,022.50. (Note: The Minimum Monthly Income Allowance remains at $2,002.50 – it will be adjusted on July 1, 2017. The income allowances are higher for residents of Hawaii and Alaska.)
Readers should understand that the Community Spouse Resource Allowance is a starting point for planning. A community spouse can typically protect resources far in excess of his or her resource allowance through Medicaid planning techniques such as the purchase of a Medicaid qualified annuity. (Be sure to consult an experienced elder law attorney before purchasing an annuity for purposes of qualification for Medicaid benefits.)

The allowances discussed in this post can be calculated from the September CPI-U. But they have not yet been formally announced by the Centers for Medicare and Medicaid Services (CMS). It is possible that CMS could ultimately announce figures that are slightly different than those above. But my projections have been correct in the past and I have a reasonable degree of confidence in them.

Further Information:

Spousal Impoverishment (from Medicaid.Gov website).

The law governing these protected amounts is found at 42 U.S.C. §1396–5.
* To illustrate, here is how I did the calculation for the Maximum CSRA for 2017:

241.428/119.8= 2.0152587

Round to 3 decimal places = 2.015

2.015 X $60,000 = $120,900 (the maximum CSRA for 2017) 

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