To financially qualify for Medicaid long-term services and supports (LTSS), an individual must have a low income and limited assets. In response to concerns that these rules could leave a spouse without adequate means of support when a married individual needs LTSS, Congress created the spousal impoverishment rules in 1988. Originally, these rules required states to protect a portion of a married couple’s income and assets to provide for the “community spouse’s” living expenses when determining nursing home financial eligibility, but gave states the option to apply the rules to home and community-based services (HCBS) waivers.
Section 2404 of the Affordable Care Act (ACA), which is set to expire on December 31, 2018, changed the spousal impoverishment rules to treat Medicaid HCBS and institutional care equally. This issue brief answers key questions about the spousal impoverishment rules, presents selected 50-state data from a 2018 Kaiser Family Foundation survey about state policies and future plans in this area, and considers the implications if Congress does not extend Section 2404. Key findings include:
- As of 2018, 50 states were applying the spousal impoverishment rules to HCBS waivers.
- Five states plan to stop applying the spousal impoverishment rules to some or all of their HCBS waivers if Section 2404 expires at the end of 2018. Two states (Arkansas and Illinois) plan to scale back by applying the rules to some but not all HCBS waivers. One state (Minnesota) would not apply the rules to some HCBS waivers but has a separate Section 1115 waiver addressing spousal deeming. Two states (Maine and New Hampshire) do not plan to apply the rules to any HCBS waivers. Forty-five states plan to continue to apply the rules to all HCBS waivers, and one state was undecided at the time of the survey.
If Congress does not extend Section 2404, the spousal impoverishment rules will revert to a state option for HCBS waivers and will no longer apply to HCBS provided under other Medicaid authorities, unless states obtain a Section 1115 waiver, as of January 1, 2019. If reauthorized, the rules would provide stability and continuity for enrollees receiving HCBS and for states administering Medicaid eligibility determinations and renewals. In addition, applying more stringent Medicaid financial eligibility rules to HCBS than to nursing homes could affect states’ progress in expanding access to HCBS, rebalancing LTSS spending, and promoting community integration.