Important Update – October 31, 2018
The federal law changes discussed below are set to expire December 31, 2018, and the financial eligibility requirements for under age 65 waiver programs (CAC, CADI, BI, DD) should revert for married couples to no spousal deeming. This means the community spouse’s assets would not be considered in determining the ill spouse’s eligibility for these waiver programs. As an example, if a community spouse has an IRA worth $250,000, the community spouse would be able to retain the IRA without affecting the eligibility of the ill spouse for Medical Assistance waiver benefits. This is good news! The implication of this change is that married couples may need to review with counsel whether to move forward with an application for benefits in 2018 or wait until 2019. Each married couple’s unique circumstances will impact the recommended timing of an application for benefits. Unfortunately, there is also a cloud on the horizon. Although the Minnesota Department of Human Services has issued guidance to counties regarding this impending change, there is a possibility that the federal law applying spousal impoverishment to the under 65 waiver programs may be extended. The Special Needs Alliance (of which Laurie Hanson and Cathryn Reher are members) is seeking to include language in the proposed federal legislation to exempt Minnesota from the extension of the spousal impoverishment requirements.
WARNING TO MARRIED PERSONS ON WAIVER PROGRAMS!!!
Due to a recent law change, you may no longer qualify for the Medical Assistance waiver program providing your long term care and supportive services. (See the implementation dates below.)
Historically, Minnesota’s waiver programs have allowed Medical Assistance recipients who qualify for an institutional level of care to receive necessary services while living in the community with their spouses and families or in alternative housing.
The simple explanation of the anticipated law change is that for married couples the available assets of both spouses will now be considered in determining financial eligibility for the waiver programs. Prior to this change, the waiver programs only considered the available assets of the non-recipient spouse (referred to as the “community” or “well” spouse).
This warning is not intended to scare you, but to encourage you to become informed and develop a plan.
THIS IS THE MOST SIGNIFICANT LAW CHANGE TO THE WAIVER PROGRAMS IN DECADES! DO NOT IGNORE THIS WARNING!
This alert only affects certain MARRIED persons with disabilities of any age enrolled (or planning to enroll) in the following Medical Assistance waiver programs:
- Community Alternative Care (CAC) waiver;
- Community Alternatives for Disabled Individuals (CADI) waiver;
- Brain Injury (BI) waiver; or
- Developmental Disability (DD) waiver.
This alert does NOT apply to a person on (or planning to enroll in) Medical assistance who is:
- Single and on a waiver program listed above;
- Single and on Elderly Waiver;
- Married and one spouse is on a CAC, CADI, DD, or BI waiver and applied for and was found eligible prior to January 1, 2014 with no subsequent break in coverage;
- Married where both spouses reside in a nursing home or are on waiver programs;
- Married and one spouse is receiving Alternative Care or Elderly Waiver; or
- Receiving waivered benefits through Medical Assistance for Employed Persons with Disabilities (MA-EPD) (however see concerns below).
Background to the Law Change
The Patient Protection and Affordable Care Act (ACA) requires states to apply spousal impoverishment rules to all waiver programs. In other words, the assets of the well spouse would be considered when determining the ill spouse’s eligibility for Medical Assistance. The income of a well spouse will now be evaluated to determine if a well spouse needs a spousal income allocation from the ill spouse, or to determine if a couple should retain additional income-producing assets above the well spouse’s asset allowance.
In 2014, the Minnesota Department of Human Services submitted an application to the Centers for Medicare and Medicaid Services (CMS) for a Section 1115 waiver to prevent the switch to spousal impoverishment rules. The Centers for Medicare and Medicaid Services (CMS) rejected DHS’s application for a waiver and subsequently issued a compliance letter to all states on May 7, 2015. On September 1, 2015, the Minnesota DHS sought reconsideration as Minnesota is the only state that did not deem assets of a well spouse for its under 65 waivered programs. However, the DHS’s efforts were unsuccessful. On December 9, 2015, DHS entered into a Corrective Action Plan with CMS to come into compliance with the new requirements. DHS, along with representatives of a variety of disability organizations, including elder law attorney Cathryn Reher of our firm, advocated for a congressional delegation to work to derail DHS’s compliance with the ACA or to make the impact of this law change less harmful. Read more in a letter to Senator Franken.
On April 21, 2016, Senator Franken introduced legislation entitled Protecting Families with Disabilities Act of 2016 to exempt Minnesota from the spousal impoverishment requirements of the Affordable Care Act. See the linked press release and bill. This bill was co-sponsored by Senator Klobuchar. This bill has not been enacted into law. The Minnesota legislature to come into compliance with the ACA passed conforming legislation effective June 1, 2016. For the full text of the bill see Minn. H.F. NO. 2749, Conference Committee Report., 89th Leg., Reg. Sess. 328-332 (2016).
The State attempted to lessen the blow of the application of the spousal impoverishment laws to home- and community-based waiver programs by:
1. Increasing the Asset Allowance for a Community Spouse:
For both nursing home and waivered programs, there will no longer be a minimum and maximum community spouse asset allowance. All couples will now benefit from the maximum asset allowance. As of June 1, 2016, the community spouse asset allowance for a married person applying for Medical Assistance in a nursing home or for a waivered program is determined as of the first day of the month that the application is submitted as follows:
- $119,220 (subject to annual adjustment commencing on January 1, 2017 and in each year thereafter);*
- An alternative allowance by court order; or
- An amount of available assets in excess of $119,220 sufficient for a community spouse to meet the community spouse’s minimum monthly income allowance.
*If a couple’s countable assets are less than $119,220 plus $3,000 ($122,220), then the community spouse will be able to retain all of the couple’s countable assets towards the allowance.
2. Expanding Undue Hardship to Exempt Retirement Funds and 529 Plans For Cause
The new legislation provides a possible safe harbor for both nursing home and waivered programs through an expansion of the undue hardship exceptions. A community spouse with available assets in excess of the maximum asset allowance (described above) may be able to keep retirement funds and/or a 529 plan for a child if the couple can show that the loss of these assets would cause an undue hardship. This legislation does not change the rule that retirement funds and 529 plans of either spouse will count towards the asset allowance total if they can be converted to cash without regard to whether a penalty would be incurred. The undue hardship exception for retirement funds is not available if the community spouse is over 59 ½ years of age or for a 529 plan if a child is over age 25. Furthermore, if an undue hardship is granted under this exception, there is no assignment of spousal support or cause of action against the community spouse for any amounts protected under the exception. These provisions became effective June 1, 2016, but will cease if federal approval is denied. Minn. H.F. NO. 2749, Conference Committee Report., 89th Leg., Reg. Sess. 328-332 (2016).
After the passage of Minnesota’s law to conform to the ACA, ongoing negotiations with CMS by DHS, the Governor’s Office, and Senators Franken and Klobuchar resulted in an 11th hour agreement in late July 2016 to limit the law change to married recipients determined eligible for waivers on or after January 1, 2014 as more fully outlined below.
- June 1, 2016: Spousal impoverishment rules will now be applied to all married APPLICANTS seeking long term care Medical Assistance through waivers or while residing in a nursing home. Married RECIPIENTS who applied for and were found eligible for waivers (other than EW) on or after January 1, 2014 will need to re-establish eligibility as of June 1st but will have time to reduce excess countable assets if not immediately eligible.
- January 3, 2016: This is the deadline for married waiver recipients who have excess countable assets to submit the proofs required by DHS Form 3340.
- February 28, 2017: Current married waiver recipients must show proof that their available assets are less than $122,220 ($119,220 community spouse asset allowance plus $3,000) by completing the Asset Assessment For Medical Assistance For Long Term Care Services (DHS Form 3340).
DHS has confirmed that any recipient through MA-EPD receiving waiver benefits should not be affected by this change. If an MA-EPD recipient cannot continue to work in the future, however, the above dates may be relevant.
Married recipients on the waiver programs received a notice dated March 1, 2016 of the impending changes from their county of financial responsibility or DHS. Additional notices on the outcome of the legislative session were sent by DHS to married waiver recipients on August 10, 2016. See copies of the notices sent to recipients: No Action Needed and Action Needed.
You Need to Have a Plan!
Each person potentially affected should begin figuring out the impact of the anticipated law changes, and develop a plan.
You Will Need Help to Navigate the Spousal Impoverishment Rules
The spousal impoverishment rules are complicated, and there is a great deal of misinformation about how they work. These rules were never intended to apply to younger families with children in their earning years, and the eligibility requirements are particularly harsh because there are no safe harbors to protect working spouses and their children. (See Cathryn Reher’s letter explaining some of these issues.) In addition, each person’s individual circumstances will affect financial eligibility. There is no one-size fits all or cookie cutter solution to establishing, or maintaining financial eligibility.
Some portion of the 2,000 persons anticipated to be affected by this change will continue to qualify without a break in benefit coverage. Some couples may be able to complete some simple restructuring of their resources to maintain program eligibility. Unfortunately, other couples will need time to undertake more drastic steps such as annuitization of excess resources, restructuring of assets, divorce, or creation of a special needs trust in order to protect their resources. These couples may need anywhere from several months to a year to restructure their estates in order for the applicant/recipient to qualify for benefits under the anticipated changes. For these couples, TIME IS OF THE ESSENCE!
The natural inclination for many applicants and recipients is to turn to the county, state, or government agencies for help understanding the impact of this law change. However, those agencies are not able to provide you with legal advice. Many county workers in the Home and Community-Based Division who have previously provided applicants and recipients with guidance have not been trained to work with these rules, as the requirement to begin compliance came up very fast! We are concerned their knowledge base will be too limited to provide accurate and timely guidance. (See Common Mistakes below.) You will need to work with an elder law attorney experienced in spousal impoverishment laws to navigate your situation. Our firm’s attorneys teach the law in this area to practitioners statewide and have the knowledge and expertise to evaluate your situation, present options, and propose a time frame for implementation of a plan to minimize the negative effects of this law change.
We want to warn you about some of the most common mistakes we hear about spousal impoverishment rules.
- “You must spend down to $6,000.” NO! THIS IS ABSOLUTELY WRONG when an applicant has a well spouse.
- The instructions for current HCBS waiver enrollees completing the Asset Assessment for Medical Assistance for Long Term Care services (MA-LTC) (DHS Form 3340) state that a community spouse may be able to keep additional income-producing assets if the community spouse’s income is less than $2,005. This figure does not factor in an excess shelter allowance which is mandatory in calculating a community spouse’s minimum monthly income allowance. Some community spouses with an income of less than $2,980.50 may qualify to retain additional income-producing assets. See the full text of the instructions by clicking here.
- “As a couple, you can’t keep more than $X in available assets.” The available summaries on spousal impoverishment are only general guidelines. There is NO WAY to determine on a cold call with a county screener, or even with an elder law attorney’s office, how much a couple can keep and still qualify the ill spouse for benefits. There are many specific facts that impact financial eligibility which cannot be adequately explored on a cold call, such as whether a couple has a disabled child or pays electric and plugs in an air conditioning unit! We have represented couples who have qualified with $350,000 in available assets and others that could not keep more than the resource limit. (This is in addition to excluded assets such as a home, car, tangible personal property, prepaid funerals, and assets converted with certain types of annuities.) Each asset and income analysis is inherently unique and depends on the couple’s circumstances! Unfortunately, because the Medical Assistance application does NOT require the county financial worker to complete the income analysis, many couples are given erroneous information as to how much the couple can keep in resources. The bottom line is that a complete and thorough review of the couple’s goals, family structure, income and assets is necessary in order to determine how much the couple can keep in resources and still qualify the ill spouse for a waiver program.
- “You must transfer the ownership of your life estate to the ill spouse as a condition of qualifying for Medical Assistance.” The county cannot force a well spouse to transfer ownership of any assets to the ill spouse as a condition of eligibility.
We would encourage married persons of any age on the CAC, CADI, BI, and DD waivers (and MAEPD/waiver recipients who may not be able to continue working) to contact us immediately for further guidance. Although we can assist persons state-wide, if you prefer local counsel, we have recommendations to help you locate an experienced special needs and elder law attorney in your area.
Contact Your Government Representatives!
PLEASE contact your state legislative and congressional representatives to find out what progress they have made with CMS to stop the transition to spousal impoverishment rules for waivered programs.