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Medicaid: Community Spouse Income Allowance

Hogberg v. State Dep’t of Soc. Servs., 2009 Conn. Super. LEXIS 50 (2009). Lynda Hogberg was admitted to a nursing home in September, 2004. Two years later, in September 2006, her husband, a community spouse, filed a Medicaid application. The application was denied in March, 2007. In April, 2007, he filed an appeal. On May 17, 2007, there was a fair hearing regarding the Department’s denial of the application and the assessment of Mr. Hogberg’s income and assets. Evidence was presented attempting to show Mr. Hogberg’s need for a higher MMMNA than is permitted in Connecticut.

Plaintiffs presented evidence that Mr. Hogberg suffers from four medical conditions which require him to expend an extraordinary amount of money monthly on prescription medication, AARP medical insurance premiums, housekeeping, and yard and snow removal expenses necessary to maintain his independence at home and that these circumstances placed a significant financial burden on him. The plaintiffs submitted evidence from four of Mr. Hogberg’s treating physicians regarding (a) the multiple chronic medical conditions from which he suffers, including his glaucoma, diabetes, hypertension, hypothyroidism, hypercholesterolemia, hyperlipidemia, mellitus, hiatal hernia and mechanical aortic valve replacement, (b) the numerous medications that he is required to take on a daily basis to control these conditions, (c) the high cost of same, (d) the limitation on his activities necessitated by these medical conditions, and (e) his increased risk of hospitalization and/or long-term care if he fails to take these medications.

Mr. Hogberg argued that his circumstances were exceptional, justifying an increase in the MMMNA pursuant to 42 U.S.C. § 1396r-5(e)(2)(B) and UPM §1570.25(D)(3)(2001). Despite the evidence presented, the hearing officer disagreed, finding that Mr. Hogberg’s situation was not exceptional. On appeal, the Court found: “The language of 42 U.S.C. § 1396r-5(e)(2)(B) and UPM §1570.25(D)(3) entails, as a predicate for increasing the MMNA, a finding of core “exceptional circumstance” that may give rise to expenses causing “significant financial duress.” [Cit.] The question in this case is whether Mr. Hogberg established that he has an exceptional circumstance resulting in significant duress. Although federal law does not define exceptional circumstances, Connecticut law does. It includes those circumstances which are severe and unusual and that prevent the community spouse from taking care of his or her activities of daily living or that directly threaten the community spouse’s ability to remain in the community. Applying this definition, the court affirmed the ALJ, finding that Mr. Hogberg’s case was not exceptional. Congress, in setting the MMMNA at 150% of the poverty level for a family of two plus an excess shelter allowance and utility allowance, had already factored in routine medical needs, such as the needs for dental and medical care and insurance premiums. Essentially, Mr. Hogberg contends that “exceptional circumstances exist whenever the community spouse’s expenses exceed his MMMNA, no matter the cause of the extra expenses.” The court found this contention, if followed, would render the word “exceptional” superfluous and could lead to an increase in the MMMNA where the community spouse is living extravagantly. Because Mr. Hogberg failed to establish that his income was inadequate to sustain him in the community without financial duress because of extraordinary circumstances, the ALJ’s decision was affirmed and the appeal denied.

Oanh Thile Huynh v. King, 269 S.W.3d 540 (Mo. Ct. App. 2008). Prior to filing a Medicaid application, the Community Spouse filed an action in Probate Court seeking appointment of a conservator and, thereafter, an increase in the spousal allowances pursuant to 42 U.S.C. § 1396r-5. A conservator ad litem was appointed in regard to the petition for spousal allowance. The State did not seek intervention in the proceeding. The Probate court, nonetheless, dismissed the petition for lack of subject matter jurisdiction, finding that MCCA does not provide an independent cause of action for court ordered support or division of assets. On appeal, the court found “Mrs. Huynh contends that the two provisions in the MCCA referring to a “court order” create a separate, judicial remedy for the community spouse to increase his or her CSMIA and/or CSRA. Mrs. Huynh’s contention is without merit. … The “court order” language of the MCCA, without any further explanation, is insufficient to confer parallel jurisdiction on a probate court.” The decision below was affirmed.

Matter of Balzarini v. Suffolk County Dep’t of Social Servs., 55 A.D.3d 187, 863 N.Y.S.2d 706 (N.Y. App. Div. 2008). In approving an institutionalized spouse for medical assistance, the Department determined that the community spouse was not entitled to an income diversion because her separate income exceeded the MMMNA. The combined marital income was approximately $4,900 per month, with roughly one-half being attributed to each spouse and the monthly expenses were $4,814. Asserting she could not support herself without her husband’s financial contribution, the wife requested a fair hearing. There, she argued that her situation constituted exceptional circumstances resulting in financial distress. 42 U.S.C. § 1396r-5(e)(2)(B). Accepting her account of income and expenses as true, the Department nonetheless rejected her argument on the ground that her expenses were not “exceptional” within the meaning of the statute. The undisputed monthly expenses were housing costs $1,580, consisting of mortgage interest and amortization in the sum of $1,115, condominium common charges of $345, real estate taxes of $95, and homeowner’s insurance of $25; utility costs of $196 per month; automobile expenses of $717, consisting of a $406 loan payment, $93 in insurance costs, and $218 for fuel, maintenance, and repairs; a Medicare premium of $78; expenses for food, clothing, medical care, and home maintenance of $760; and that she pays $1,483 per month in credit card payments. The total of these expenses, $4,814, exceeded the community spouse’s monthly income of $2,445 by $2,369. On appeal, the court affirmed in part and reversed in part. The Court:

Annull[ed] so much of the DOH’s determination as … denied that portion of the petitioner’s application which was to increase the Medicaid minimum monthly maintenance needs allowance to include expenses for housing, utilities, automobile, Medicare, food, clothing, medical care, and home maintenance, vacating so much of the DSS’s determination as denied that portion of the application, and granting that portion of the application to the extent of remitting the matter to the DOH for the calculation of the increase in the minimum monthly maintenance needs allowance so that a portion of his income will be made available to his wife. We otherwise deny the petition, affirm the determination, and dismiss the proceeding on the merits

In holding that ordinary expenses must be considered as part an exceptional circumstances claim under Section (e)(5)(B), the court found that the need for long-term care may reduce, but does not eliminate, ordinary living expenses. As a result, the income of a community spouse may be depleted just as easily by ordinary expenses as by exceptional, or unforeseen expenses, where those ordinary expenses are extraordinary in relation to the individual income of the community spouse. “Even with the best of intentions and expert financial planning, therefore, the community spouse is frequently unable to reduce expenses significantly. If the community spouse is to have “income and resources sufficient to live with independence and dignity,” therefore, the calculation of the funds that will be available to her cannot ignore those expenses that may have been ordinary before, but have become extraordinary in terms of the income that is available to the community spouse without the contribution of the institutionalized spouse. … With the exception of the credit card expenses, the remaining recurring monthly expenses are all necessities of daily living. Surely the statute and regulations did not intend that where housing costs exhaust the minimum monthly maintenance needs allowance, the community spouse should not be entitled to some funds with which to pay for food and other necessities of life. … the undisputed arithmetic here is that without a contribution from her institutionalized husband, Mrs. Balzarini will be unable to pay her reasonable housing and living expenses. That those expenses may be ordinary does not preclude them from being “exceptional” within the meaning of the applicable statute and regulations where, as here, they are both reasonable and extraordinary in light of the means that are available to satisfy them.”

M.E.F. v. A.B.F., 925 A.2d 12 (N. J. App. 2007). In this case, the institutionalized spouse was 75 years old and confined to a nursing home with Alzheimer’s disease. He spent down his resources toward eligibility. His income was $2,333 per month. His wife’s income was $576 per month. After determining that the husband was eligible for Medicaid, the Department found that the wife was entitled to $445 of her husband’s monthly income as a maintenance allowance. On May 31, 2005, the wife filed an action in family court for separate maintenance seeking an award of her husband’s remaining income. She also pursued an administrative remedy alleging the allowance was inadequate and, on June 29, 2005, the Board raised her allowance to $1,173. The husband’s remaining income of $957 was paid to the nursing home. Although she maintained the allowance was inadequate, rather than requesting a fair hearing, the wife renewed her motion for separate maintenance in family court. She argued that she could elect between the administrative process or seeking a support order and that the “exceptional circumstances” standard applies only in the administrative process; she argued that family court could consider actual need and ability to pay, the duration of the marriage, the standard of living established in the marriage and other factors. The Board argued that 42 U.S.C. § 1396r-5(d)(5) applies only to orders entered before institutionalization. The trial court held that MCCA applies to orders in existence. It also held that once a community spouse begins the administrative process, she must exhaust her administrative remedies.

On appeal, the Department conceded that MCCA provides alternative routes for increasing the MMMNA. However, it argued that the exceptional circumstances standard allies in each proceeding and that once the administrative process is begun, the community spouse must exhaust her administrative remedies. In deciding the case, the court reviewed MCCA’s legislative history which included the following:

The Committee recognizes that there will be some instances in which the rules set forth in the bill do not take adequate account of the special circumstances affecting a particular community spouse. The bill therefore provides that, 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 must be at least as great as the amount of the income ordered to be paid. Similarly, if a court has entered a support order against an institutionalized spouse requiring that spouse to transfer countable resources to the community spouse, the spouse may comply with the court’s order without running afoul of the transfer of assets prohibitions, even where the effect is to leave the community spouse with countable resources in excess of $ 48,000. [House Report No. 100-105(II), at 72-73; 1988 U.S.C.C.A.N. at 895-96.]

The Congressional committee failed to make any statement concerning the circumstances in which court ordered support could be utilized. It also failed to address the applicable standard of proof. The language of the statute, however suggests that 42 U.S.C. § 1396r-5(d)(5) applies where the court has entered (past tense) an order prior to Medicaid’s administrative determination of the MMMNA. “It is noteworthy that the Act does not authorize the community spouse to obtain a court order after eligibility has been determined, nor does it explicitly permit parallel proceedings. It merely recognizes the effect of an order of support if it has been previously obtained.” Although the court found that the community spouse had initiated the administrative process and could not initiate parallel proceedings which, essentially, amounted to forum shopping, the standards for the two potential proceedings were different. Clearly, because a prior support order would be governed under the domestic statute (need and ability to pay), the court found no principled reason why that would change simply because one spouse was found to be eligible for Medicaid and subject to the spousal income protections of MCCA. The court left open the possibility that a family court proceeding could be initiated after the administrative process concludes and dismissed the action, without prejudice, due to the wife’s failure to exhaust the administrative remedy initially elected.

Ark. HHS v. Smith, 370 Ark. 490 (2007). A community spouse sought an increase in the CSMIS and in the CSRA prior to filing a Medicaid application for her husband. The Department intervened, arguing the court had no jurisdiction because no Medicaid application had been filed. On appeal the court framed the issues as “(1) whether Karen was entitled to proceed directly to circuit court to obtain an order of support, or (2) whether she was first required to avail herself of the administrative procedures set out in the Medicaid Catastrophic Coverage Act.” The Department argued, and the appellate court agreed, that MMCA does not create an independent, original cause of action in State court whereby potential Medicaid applicants could get a preemptive court order attributing and allocating assets in anticipation of a future application for Medicaid. In granting the Department’s writ of prohibition, the Court held:

DHHS is the sole entity charged with administering Medicaid and determining eligibility for Medicaid benefits. The fact that Congress used language to the effect of “if a court has entered an order of support” — without any further explanation of the circumstances in which such an order might be entered — is insufficient to confer jurisdiction, even impliedly, on the circuit court. This is particularly so when one considers that sections 1396r-5(d)(5) & (f)(3) only generally reference an order of spousal support; they do not mention a court-ordered CSRA, CSMIA, or MMMNA. One who wishes to apply for Medicaid must go through the process established by Congress and the State and cannot do an “end run” around that process by seeking a preemptive court order of spousal support.

Plumb v. Mo. Dep’t of Soc. Servs., 246 S.W.3d 475 (Mo. App. 2007). The Department denied a petition to increase the Community Spouse’s MMMNA. On appeal to the Circuit Court, that decision was reserved and the Department was ordered to pay $5,500 in attorney’s fees. The court of appeals upheld the Circuit Court’s decision that the community spouse was entitled to an increased MMMNA, but reversed the award of attorney’s fees for the following reasons: The community spouse presented evidence that he had monthly expenses of $2,861.72 including shelter expenses, including a mortgage, property taxes, utilities, insurance, lawn care, and subdivision fees. He also incurred yard care expenses due to his heart condition and had expenses for food and clothing. His testimony regarding expenses was uncontradicted. His largest monthly expense was $672.50 in medically related expenses. The Department denied his request for an increased MMMNA because his “expenses did not represent exceptional circumstances resulting in significant financial duress and did not increase his MMMNA to cover those expenses.” See 42 U.S.C. § 1396r-5(e)(2)(B). As this circumstance was discussed on appeal the Court noted that Mr. Plumb’s medical expenses amounted to forty-two percent of him MMMNA. The Court found that the hearing officer in the present case made the same mistake as was made in Davis v. Pennsylvania Dep’t of Pub. Welfare, 776 A.2d 1026 (Pa. Commw. Ct. 2001). There, “the hearing officer mistakenly understood his task to be determining whether an expense was ‘exceptional’ or ‘ordinary;’ that is, he required the expense itself to be exceptional, rather than determining whether or not the expense involved presented exceptional demands on the resources of this particular community spouse.” The plain language of the statute does not require a claimant to prove exceptional circumstances in order to receive an increase in his or her MMMNA in Missouri, only significant financial duress. The attorney’s fee award was reversed, however, after the court found the case was not an “agency proceeding” within the meaning of the applicable Missouri statute.

Blumberg v. Tenn. Dep’t. of Human Srvs., 2000 Tenn. App. LEXIS 709 (2000). Mr. Blumberg filed a petition in Circuit Court seeking all of his wife’s marital assets and an increase in his MMMNA. The Circuit court issued an order requiring Mrs. Blumberg to pay her husband, as support, all of her monthly income. Mr. Blumberg then applied for Medicaid on behalf of his wife. The application was approved but the Department denied his request for an income allocation. Mr. Blumberg appealed that denial. His appeal to the ALJ was denied and his appeal to Chancery Court was denied based on a finding that the prior decision did not bind the Department because it received no notice. The case was appealed to the Court of Appeals. The issue on appeal was whether DHS should be required to follow the Order of the Sumner County Circuit Court and whether DHS and the Chancery Court exceeded its jurisdiction by reversing the Order of the Circuit Court. Examining the statute, the Court found:

If a community spouse seeks an increase in spousal income allowance (MMMNA), the Act sets out two different and independent avenues of procedure that can be followed in setting the increase. The procedures are found in 42 U.S.C. § 1396r-5(d)(5) and 42 U.S.C. § 1396r-5(e). 42 U.S.C. § 1396r-5(e)(2) gives the community spouse a chance to demonstrate a need for more income than the allowance that would have otherwise been calculated under 42 U.S.C. § 1396r-5(d). This is accomplished through an administrative Medicaid fair hearing.

Additionally, 42 U.S.C. § 1396r-5(d)(5) gives the community spouse a judicial option for court ordered support. The statute provides, in subsection (d)(5), as follows: “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 not be less than the amount of the monthly income so ordered.” Thus, the crux of the litigation in the case hinges on whether these two provisions are absolute alternative methods.

Mr. Blumberg chose the judicial route in seeking an increase in the MMMNA, which is within the ambit of the statute. Although it would have been preferable for Mr. Blumberg to give the Department notice, the statute does not require him to do so. The Department had notice of the Circuit Court action when the Medicaid application was filed. It could have filed a motion to set aside the judgment and intervene. Instead, it used the fair hearing and the Chancery Court improperly to act as an appellate court with regard to the Circuit Court.

Schweiker v. Gray Panthers, 453 U.S. 34 (1981). The Medicaid program provides federal funds to States that pay for medical treatment for the poor. An individual’s entitlement to Medicaid benefits depends on the financial resources “available” to him. Some States determine eligibility by assuming—”deeming”—that a portion of the spouse’s income is “available” to the applicant. “Deeming” thus has the effect of reducing both the number of eligible individuals and the amount of assistance paid to those who qualify. The question in this case is whether the federal regulations that permit States to “deem” income in this manner are arbitrary, capricious, or otherwise unlawful.

Jenkins v. Fields, 1996 U.S. Dist. LEXIS 5852 (S.D. N.Y. 1996).

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