Income of the Community Spouse

The law protects a Community Spouse with low income. It does this by diverting a portion of the applicant’s income to the Community Spouse. The rules are different in each state so we’re giving you the law. In 2023, states that allow a maximum income allowance say that a Community Spouse with less than $3,715.50 are entitled to a diversion from the applicant with the goal of getting the applicant up to that amount. In less generous States, the minimum Community Spouse income allowance in 2023 is $2,465.

Common myths include the following: (1) the Community Spouse’s income must be used to pay nursing home bills, (2) that the Community Spouse’s income is combined with the applicant’s income to determine whether a qualified trust is necessary; and (3) that the applicant is not eligible because the Community Spouse has high income. Each of these myths is wrong.

42 U.S. Code § 1396r–5(b)(1) provides that except with respect to jointly-owned income producing property where there is no designation regarding which spouse is paid, no income of the Community Spouse shall be deemed available to the institutionalized spouse. In cases where a contract or trust instrument specifies which spouse is paid, the name on the check rule applies. In other words, the income belongs to whichever spouse’s name is on the check.

The only purpose for examining the Community Spouse’s income is to determine whether the Community Spouse has low-income and is entitled to keep some or all of the institutionalized spouse’s income. 42 U.S. Code § 1396r–5(d) establishes income protection rules for a low-income Community Spouse. At this time, those rules provide as follows:

(d) Protecting income for community spouse

(1) Allowances to be offset from income of institutionalized spouse
After an institutionalized spouse is determined or re-determined to be eligible for medical assistance, in determining the amount of the spouse’s income that is to be applied monthly to payment for the costs of care in the institution, there shall be deducted from the spouse’s monthly income the following amounts in the following order:

(A) A personal needs allowance (described in section 1396a(q)(1) of this title), in an amount not less than the amount specified in section 1396a(q)(2) of this title.
(B) A community spouse monthly income allowance (as defined in paragraph (2)), but only to the extent income of the institutionalized spouse is made available to (or for the benefit of) the community spouse.
(C) A family allowance, for each family member, equal to at least ⅓ of the amount by which the amount described in paragraph (3)(A)(i) exceeds the amount of the monthly income of that family member.
(D) Amounts for incurred expenses for medical or remedial care for the institutionalized spouse (as provided under section 1396a(r) of this title).

In subparagraph (C), the term “family member” only includes minor or dependent children, dependent parents, or dependent siblings of the institutionalized or community spouse who are residing with the community spouse.

(2) Community spouse monthly income allowance defined
In this section (except as provided in paragraph (5)), the “community spouse monthly income allowance” for a community spouse is an amount by which—

(A) except as provided in subsection (e), the minimum monthly maintenance needs allowance (established under and in accordance with paragraph (3)) for the spouse, exceeds
(B) the amount of monthly income otherwise available to the community spouse (determined without regard to such an allowance).

(3) Establishment of minimum monthly maintenance needs allowance

(A) In general
Each State shall establish a minimum monthly maintenance needs allowance for each community spouse which, subject to subparagraph (C), is equal to or exceeds—

(i) the applicable percent (described in subparagraph (B)) of 1⁄12 of the income official poverty line (defined by the Office of Management and Budget and revised annually in accordance with section 9902(2) of this title) for a family unit of 2 members; plus
(ii) an excess shelter allowance (as defined in paragraph (4)).
A revision of the official poverty line referred to in clause (i) shall apply to medical assistance furnished during and after the second calendar quarter that begins after the date of publication of the revision.

(B) Applicable percent
For purposes of subparagraph (A)(i), the “applicable percent” described in this paragraph, effective as of—

(i) September 30, 1989, is 122 percent,
(ii) July 1, 1991, is 133 percent, and
(iii) July 1, 1992, is 150 percent.

(C) Cap on minimum monthly maintenance needs allowance
The minimum monthly maintenance needs allowance established under subparagraph (A) may not exceed $1,500 (subject to adjustment under subsections (e) and (g)).

(4) Excess shelter allowance defined

In paragraph (3)(A)(ii), the term “excess shelter allowance” means, for a community spouse, the amount by which the sum of—

(A) the spouse’s expenses for rent or mortgage payment (including principal and interest), taxes and insurance and, in the case of a condominium or cooperative, required maintenance charge, for the community spouse’s principal residence [emphasis added], and
(B) the standard utility allowance (used by the State under section 2014(e) of title 7) or, if the State does not use such an allowance, the spouse’s actual utility expenses, exceeds 30 percent of the amount described in paragraph (3)(A)(i), except that, in the case of a condominium or cooperative, for which a maintenance charge is included under subparagraph (A), any allowance under subparagraph (B) shall be reduced to the extent the maintenance charge includes utility expenses.

(5) Court ordered support
If a court has entered an order against an institutionalized spouse for monthly income for the support of the community spouse, the community spouse monthly income allowance for the spouse shall be not less than the amount of the monthly income so ordered.

(6) Application of “income first” rule to revision of community spouse resource allowance
For purposes of this subsection and subsections (c) and (e), a State must consider that all income of the institutionalized spouse that could be made available to a community spouse, in accordance with the calculation of the community spouse monthly income allowance under this subsection, has been made available before the State allocates to the community spouse an amount of resources adequate to provide the difference between the minimum monthly maintenance needs allowance and all income available to the community spouse.

42 U.S. Code § 1396r–5(e)(2)(B) also provides: “If either such spouse establishes [at a fair hearing] that the community spouse needs income, above the level otherwise provided by the minimum monthly maintenance needs allowance, due to exceptional circumstances resulting in significant financial duress, there shall be substituted, for the minimum monthly maintenance needs allowance in subsection (d)(2)(A), an amount adequate to provide such additional income as is necessary.” Unfortunately, there is virtually no case law supporting administrative revision of the income allowance.

As discussed in later chapters, the Medicaid default allowance can be modified by Court order. 42 U.S. Code § 1396r–5(d)(5) provides that the Community Spouse “monthly income allowance for the spouse shall be not less than the amount of the monthly income so ordered” once an order for support is entered.