When a community spouse's income is below his or her minimum monthly maintenance needs allowance (MMMNA), should the shortfall be made up by any available income from the institutionalized spouse before the community spouse's resource allowance (CSRA) is permitted to be increased? Courts have come down on both sides of this oft-litigated issue over the past several years, and even federal Medicaid authorities have sometimes appeared to be of two minds about it.
Now, one of the thorniest issues in Medicaid law may soon be resolved. The U.S. Supreme Court has agreed to hear the appeal from a Wisconsin state court decision holding that the state's use of the 'income first' rule to bring a community spouse's income up to the MMMNA violates federal law. Blumer v. Wisconsin Dep't of Health and Family Services, 237 Wis. 2d 810 (Wis. App. 2000), review den., 239 Wis. 2d 309 (2000), cert. granted sub nom Wisconsin Dep't of Health & Family Services v. Blumer, 121 S. Ct. 2547 (June 25, 2001).
Irene Blumer was admitted to a nursing home in 1994 and applied for Medicaid in December 1996. The Green County Department of Human Services denied the application, determining that Mrs. Blumer and her husband, Burnett, were over-resourced, even though Mr. Blumer's monthly income was below his MMMNA. Mrs. Blumer argued that because her husband's CSRA did not generate sufficient income to meet his MMMNA, the examiner should set a higher CSRA that would yield Mr. Blumer more income. Guided by a Wisconsin statute that requires the institutionalized spouse to make his or her income available to the community spouse before the CSRA is raised by increasing the community spouse's allowable assets, the hearing examiner rejected Mrs. Blumer's request.
The circuit court affirmed the Department's decision, and Mrs. Blumer appealed, arguing that the state statute requiring this ''income first'' approach conflicts with federal law. The Department countered that the federal spousal impoverishment provisions found at 42 U.S.C. § 1396r-5 are ambiguous and that, while ''income first'' is not mandated under federal law, it is permissible.
The Wisconsin Court of Appeals reversed, ruling that the federal statute unambiguously prohibits the use of the ''income first'' rule. The court noted that some courts have found that because the phrase "community spouse's income" in 42 U.S.C. § 1396r-5(e)(2)(C) is not specifically defined in the statute, they have concluded that it is reasonable to interpret "community spouse's income" as an amount that includes the imputation of income paid in the name of the institutionalized spouse. However, the Wisconsin court found that the statute's language "very specifically directs the increase of the CSRA to an amount sufficient to generate additional income to meet the MMMNA." In addition, the court ruled that the section of the statute in question relates to pre-eligibility determinations, while the section of the statute that discusses income transfers from institutionalized spouse to community spouse, § 1396r-5(d)(1), applies only to post-eligibility transfers. "Because § 1396r-5(d) . . . is limited to post-eligibility determination transfers, while increasing the CSRA pursuant to § 1396r-5(e)(2)(C) is not so limited," the court writes, "then increasing the CSRA via resources is the only method by which a community spouse can be afforded more income for the MMMNA at the time MA eligibility is being determined for the institutionalized spouse." The court also noted that application of the ''income first'' rule would defeat the purpose of the spousal impoverishment provisions if the institutionalized spouse dies first and the community spouse suddenly loses the spouse's income.
After the Wisconsin Supreme Court declined the Wisconsin Department of Health and Family Services' request for review, the U.S. Supreme Court granted certiorari.
Following are other key rulings involving application of the ''income first'' rule. Links are to ElderLawAnswers case summaries, where in most cases links to the full-text of the decisions can be found:
Golf v. N.Y. State Dept. of Social Services
Chambers, et al. v. Ohio Dept. of Human Services, et al
Thomas v. Commissioner of the Division of Medical Assistance
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