Medi-Cal Nursing Home Care Update: Spousal Protections

The Pre-DRA Rules
The Medi-Cal rules provide special help when one spouse needs care in a nursing home and the other spouse is healthy enough to remain at home. These rules are called the "spousal protections." They were designed so that care for one spouse would not impoverish the other, who needs to keep up the home and live in the community. Under the spousal protections, the healthy spouse ("at-home spouse") can retain at least $99,540 (2006 amount) of countable assets.

The Medi-Cal rules also allow an at-home spouse to keep additional countable assets if the at-home spouse's monthly income is low (under $2,489 for 2006). In that situation, Medi-Cal has allowed the at-home spouse to retain additional assets above the $99,540 - to invest and bring his or her income up. This is especially important in cases where income of the nursing home spouse will stop at that spouse's death.

For example, let's say that Eleanor (the at-home spouse) has monthly income of $1,000. Her husband Franklin (the nursing home spouse) has monthly income of $1,800. Medi-Cal would allow Eleanor to ignore Franklin's income, and keep additional assets and invest them to bring her monthly income up to $2,489. If Eleanor has $300,000 to invest, and she invests it in CDs at 4%, it will produce $1,000 per month of income for her. Her monthly income would jump to $2,000 - still within the allowed $2,489. To keep such additional assets, Eleanor would need to request a fair hearing (an internal Medi-Cal appeal process) or file a court petition. Since Eleanor's monthly income would still be below $2,489 even if she keeps the $300,000 of additional assets, Franklin could then transfer some of his monthly income ($489) to Eleanor, to bring her total monthly income up to $2,489.

The DRA Change
The Deficit Reduction Act of 2005 (DRA) weakens the spousal protections. As we've discussed under "Weakening the Spousal Protections" in our Medi-Cal Update:Overall article, the DRA allows the at-home spouse to keep additional countable assets only if the combined monthly income of the at-home and nursing home spouse is less than $2,489. So, before seeking to keep additional countable assets, Eleanor would need to accept $1,489 of Franklin's monthly income - bringing her to $2,489. Eleanor, therefore, would not be allowed to retain countable assets greater than $99,540.

California Implementation
In April 2006, the California Department of Health Services (DHS) issued guidelines providing that the DRA changes weakening the spousal protections would be effective for fair hearings related to applications submitted March 1, 2006 or later (except for applications requesting retroactive coverage beginning prior to March 1, 2006).

On their face, the DHS guidelines apply only to fair hearings. At this time, no one knows whether this DRA change would apply if the request to keep additional countable assets is made via a court petition, rather than via a fair hearing. Further, if a judge determines that the DRA changes do not apply to the court process, no one knows whether DHS would follow the judge's court order. Married couples applying for Medi-Cal who have countable assets exceeding $100,000 should work with an experienced and capable elder law attorney.