Implications of the Expiration of Medicaid Long-Term Care Spousal Impoverishment Rules for Community Integration

To financially qualify for Medicaid long-term services and supports (LTSS), an individual must have low income and limited assets. In response to concerns that these rules could leave a spouse without adequate support when a married individual needs LTSS, Congress created the spousal impoverishment rules in 1988. 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, 2019, changed the spousal impoverishment rules to treat Medicaid HCBS and institutional care equally. Applying more stringent Medicaid financial eligibility rules to HCBS than to nursing homes could slow or begin to reverse states’ progress in expanding access to HCBS, while reauthorizing the rules would provide stability for enrollees and states. This issue brief answers key questions about the spousal impoverishment rules, presents 50-state data from a 2019 Kaiser Family Foundation survey about state policies and future plans, and considers the implications if Congress does not extend Section 2404. Key findings include:

• Some states may stop applying the spousal impoverishment rules to HCBS if Section 2404 expires. Forty of 51 states plan to continue applying the rules to at least some HCBS waiver populations. Two of 11 states plan to continue applying the rules to Section 1915 (i) state plan HCBS enrollees, while none of the eight states electing Community First Choice HCBS option plan to continue applying the rules to those enrollees.
• Fourteen states expect that the expiration of Section 2404 would affect HCBS enrollees. The most frequently cited outcome was fewer individuals eligible for waiver services. Without Section 2404, the spousal impoverishment rules will revert to a state option for most HCBS waiver enrollees and will no longer apply to HCBS provided under other Medicaid authorities, unless states obtain a Section 1115 waiver, as of January 1, 2020.
• Eight states report that the repeated temporary extensions of Section 2404 to date have resulted in confusion among enrollees and/or increased staff workload or administrative burdens.