Medicaid has a strict asset limit that applies to both spouses (which is $3,000 in most states) when applicants are 65 or older, blind or disabled. Normally with Medicaid for the aged, blind and disabled (ABD) benefits, eligibility is based on household income and assets, and not a specific medical or functional limitation.
Conversely, spouses of enrollees requiring Medicaid nursing home benefits or Home and Community Based Services (HCBS) frequently do not need to qualify for Medicaid themselves. If regular Medicaid ABD asset limits applied to these ‘community spouses,’ they would struggle to pay for living expenses and home maintenance costs.
Congress created spousal impoverishment rules in the Medicare Catastrophic Coverage Act of 1988 to protect these community spouses from financial ruin. (Community spouses can also be called well spouses.) As a result, eligibility rules for Medicaid-covered Long Term Services and Supports (LTSS) differ from other types of Medicaid benefits when only one spouse is applying. When this occurs, only the applying spouse’s income is counted.
Community spouses can keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s monthly income, which is sometimes called a “spousal allowance.” In 2020, this MMMNA can increase a well spouse’s monthly income between a minimum of $2,155.00 and maximum of $3,216.00. (Because it is based on the federal poverty level – which is higher outside the continental U.S. – the minimum MMMNA is slightly higher in Alaska and Hawaii.)
In 2020, community spouses can also keep between $25,728 and $128,640 of their household assets through a Community Spouse Resource Allowance (CSRA). Additionally, these well spouses can receive a housing allowance of up to $646.50 each month. (The minimum housing allowance also is greater in Alaska and Hawaii, but CSRA levels are not.)
States had only been required to apply spousal impoverishment rules to Medicaid nursing home enrollees, but not to recipients of HCBS. The Affordable Care Act made these protections mandatory for recipients of HCBS through the end of 2018, and that provision was extended through November 30, 2020 by the CARES Act.