The Minnesota Court of Appeals interprets federal Medicaid law to mean that when an institutionalized spouse receiving Medicaid benefits in one state moves to a second state during one continuous period of institutionalization, the second state may apply its own asset limits but must use the asset assessment from the first continuous period of institutionalization in the other state.
In June 1991, Rita Dullard was institutionalized in Illinois and applied for Medicaid benefits under that state''s Medicaid plan. At the time of her application, Rita and her husband, John, had assets worth $75,121. Because an institutionalized spouse could retain $66,480 under Illinois'' eligibility rules, Mr. Dullard spent down the couple''s assets until Mrs. Dullard qualified for Medicaid. Mr. Dullard retained assets worth $59,222.
In August 1992, the Dullard family relocated Mrs. Dullard to Minnesota so that she could be closer to her daughter, SuAnne. After being out of a nursing home only part of one day while in transit to Minnesota, Mrs. Dullard was placed in an Itasca County nursing home, after which SuAnne Dullard applied for Minnesota medical assistance benefits on her mother''s behalf. Itasca County Human Services conducted an asset assessment, pooled the couple''s assets, and determined that Mrs. Dullard had total countable assets of $57,282 and an estimated spousal share of $28,6410, an amount in excess of the limit allowable to qualify for Minnesota Medicaid benefits. The Dullards appealed the county''s benefit denial, arguing that the federal Medicaid statute provides that states may conduct an asset assessment only once, at the beginning of the "first continuous period of institutionalization" (42 U.S.C.A. s 1396r-5), and that thereafter other states may not deem the community spouse''s assets available to the institutionalized spouse. The state Department of Human Services countered that under its interpretation of the federal statute, Mrs. Dullard began a new continuous period of institutionalization when she entered a Minnesota institution and that therefore it can conduct an asset assessment de novo, it can taking into account any appreciation of assets since the first assessment, and it may again hold Mr. Dullard''s assets available to his wife and require a second spend down to qualify for benefits.
Conceding that the statute is "not the model of clarity," the court finds a middle ground between the Dullard''s position, which the court says might encourage applicants to "shop" for states with generous eligibility standards to qualify in, and the Department''s position, which it holds places an unfair burden on couples by allowing the second state to pool any appreciation of the community spouse''s share. The court rules that the correct interpretation of the statute is that when an institutionalized spouse moves from another state to Minnesota during a continuous period of institutionalization, Minnesota may conduct its own asset assessment and apply its own asset limits, but that it may consider only the assets of the couple as of the first continuous period of institutionalization in the other state. "[O]nce assets are calculated and then spent down to qualify," the court writes, "the community spouse''s remaining assets and their appreciation belong to him or her." At the same time, the second state must consider deterioration of those assets in its asset assessment, and apply a credit for any spend down of assets in the first state.
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