The opinion
Cite as 2014 Ark. 251
SUPREME COURT OF ARKANSAS
No. CV-13-870
ARKANSAS DEPARTMENT OF Opinion Delivered May 29, 2014
HUMAN SERVICES
APPELLANT APPEAL FROM THE ARKANSAS
COUNTY CIRCUIT COURT,
V. [NO. CV-12-55]
HONORABLE DAVID G. HENRY,
GORDON PIERCE JUDGE
APPELLEE
REVERSED AND REMANDED.
JIM HANNAH, Chief Justice
Appellant, the Arkansas Department of Human Services (“DHS”), appeals from an
order of the Arkansas County Circuit Court reversing and remanding DHS’s decision that
appellee, Gordon Pierce, was ineligible for Medicaid benefits. The circuit court ruled that
retirement accounts owned by appellee’s spouse, Martha Pierce, should not have counted in
the determination of Gordon’s eligibility for long-term-care Medicaid benefits. DHS
appealed to the Arkansas Court of Appeals, which recommended certification of the appeal
to this court because it involves an issue of first impression and substantial public interest.
This court accepted certification, and our jurisdiction is proper pursuant to Arkansas Supreme
Court Rule 1-2(d)(2) (2013). We hold that a spouses’s individual retirement account
(“IRA”) and 401(k) may be countable resources under the Medicare Catastrophic Coverage
Act of 1988, 42 U.S.C. § 1396r-5. Therefore, we reverse and remand the circuit court’s
order.
Cite as 2014 Ark. 251
This case requires the court to interpret the “spousal impoverishment” provisions of
the Medicare Catastrophic Coverage Act of 1988 (the “MCCA”), 42 U.S.C. § 1396r-5, “a
complex set of instructions made part of the federal Medicaid statute.” Wis. Dep’t of Health
& Family Servs. v. Blumer, 534 U.S. 473, 477 (2002). Medicaid was enacted in 1965 as Title
XIX of the Social Security Act, and the “federal Medicaid program provides funding to
States that reimburse needy persons for the cost of medical care.” Id. at 479.1 “‘Each
participating State2 develops a plan containing reasonable standards . . . for determining
eligibility for and the extent of medical assistance,’ within boundaries set by the Medicaid
1
As noted by the Missouri Court of Appeals,
Language in the federal Medicaid law and in the statutes and regulations of states that
participate in the Medicaid program has been characterized, inter alia, as (1) a
“virtually impenetrable ‘Serbonian bog,’ ” Ross v. Giardi, 237 Conn. 550, 680 A.2d
113, 116–17 (Sup. 1996), (2) “almost unintelligible to the uninitiated,” Friedman v.
Berger, 547 F.2d 724, 727 n.7 (2d Cir. 1976), and (3) an “aggravated assault on the
English language, resistant to attempts to understand it.” Friedman v. Berger, 409 F.
Supp. 1225, 1225–26 (S.D.N.Y. 1976).
Maples v. Dep’t of Soc. Servs., 11 S.W.3d 869, 873 n.5 (Mo. Ct. App. 2000).
2
If a state participates in Medicaid, it must provide coverage to the “categorically
needy.” 42 U.S.C. § 1396(a)(10)(A) (Supp. II 1982). These are persons eligible for cash
assistance under either the Aid for Dependent Children program or the Supplemental
Security Income program. See Atkins v. Rivera, 477 U.S. 154, 157 (1986). Congress has also
enacted an optional program for the “working poor” who are deemed “medically needy.”
Ramsey v. Dep’t of Human Servs., 301 Ark. 285, 287, 783 S.W.2d 361, 362 (1990). The
“medically needy” become eligible for Medicaid benefits when their income and assets are
reduced by incurred medical expenses that reduce their income and assets below certain
established levels. Id., 783 S.W.2d at 362. This then puts them in roughly the same position
as the “categorically needy.” Id., 783 S.W.2d at 362. Arkansas has elected to include this
optional plan under its State Medicaid Plan. Id., 783 S.W.2d at 362.
2
Cite as 2014 Ark. 251
statute and the Secretary of Health and Human Services.” Id. (quoting Schweiker v. Gray
Panthers, 453 U.S. 34, 36 (1981)); 42 U.S.C. § 1396a(a)(17). “In formulating those standards,
States must ‘provide for taking into account only such income and resources as are, as
determined in accordance with standards prescribed by the Secretary, available to the
applicant.’” Blumer, 534 U.S. at 479 (emphasis in original) (citing § 1396a(a)(17)(B)). “[S]tate
methodologies for determining eligibility must be ‘no more restrictive’ than the federal
methodology that would be employed under the supplemental security income [SSI]
program.” Geston v. Anderson, 729 F.3d 1077, 1079 (8th Cir. 2013); 42 U.S.C. §
1396a(a)(10)(C)(i). “A State’s methodology is considered ‘no more restrictive’ if ‘additional
individuals may be eligible for medical assistance and no individuals who are otherwise
eligible are made ineligible for such assistance.’” Geston, 729 F.3d at 1079; § 1396a(r)(2)(B).
“Because spouses typically possess assets and income jointly and bear financial
responsibility for each other, Medicaid eligibility determinations for married applicants have
resisted simple solutions.” Blumer, 534 U.S. at 479. Prior to the enactment of the MCCA,
when one spouse entered a nursing home (or other institution) and applied for Medicaid,
each spouse was treated as a separate household. See H. R. Rep. No. 100-105(II) (1987),
reprinted in 1988 U.S.C.C.A.N., 1987 WL 61566, at *66. Income, such as Social Security
checks, pensions, and interests or dividends from investments, were considered to belong to
the spouse whose name was on the instrument conveying the funds. Id. Thus, when the
husband, for example, entered a nursing home and the couple’s pension check had only the
husband’s name on it, all of that income was attributed to him when determining Medicaid,
3
Cite as 2014 Ark. 251
leaving the wife destitute. Id. Conversely, if the wife entered the nursing home, because
none of the income was considered hers, the husband was under no obligation under federal
law to contribute any income toward the cost of her care. Id.
The rule for attribution of resources was basically the same as that for attributing
income. Id. Generally, in the month following institutionalization, resources to which a
spouse had unrestricted access, such as a joint savings account, were considered available to
that spouse for eligibility purposes. Id. On the other hand, assets held solely by the
community spouse were, after the first month, considered to belong to her, and she had no
obligation under federal law to contribute any amount of such resources toward the costs of
care of the institutionalized spouse. Id. at *66–67. Thus, before the enactment of the MCCA,
“[m]any community spouses were left destitute by the drain on the couple’s assets necessary
to qualify the institutionalized spouse for Medicaid and by the diminution of the couple’s
income posteligibility to reduce the amount payable by Medicaid for institutional care.
Conversely, couples with ample means could qualify for assistance when their assets were
held solely in the community spouse’s name.” Blumer, 534 U.S. at 480 (internal citation
omitted).
In the MCCA, Congress sought to end the “pauperization” of the community spouse
“by assuring that the community spouse has a sufficient—but not excessive—amount of income
and resources available . . . while . . . [the institutionalized spouse] is in a nursing home at
Medicaid expense.” H. R. Rep. No. 100–105(II), at *65. (Emphasis added.) In addition,
“Congress intended to close the loophole where a couple could shelter resources in the
4
Cite as 2014 Ark. 251
community spouse’s name while the institutionalized spouse received Medicaid.” Johnson v.
Guhl, 91 F. Supp. 2d 754, 761 (D. N. J. 2000).
“To achieve those goals, the MCCA requires that at the time of institutionalization,
a ‘snapshot’ of the total value of the couple’s resources owned by either the institutionalized
or community spouse is inventoried or assessed.” Id.; 42 U.S.C. § 1396r-5(c)(1)(A). The
couple’s resources are divided into countable and exempt assets and one-half of the total
value of the resources “to the extent either the institutionalized spouse or the community
spouse has an ownership interest” is considered a spousal share. 42 U.S.C. § 1396r-5(c)(1)(A).
To avoid impoverishment of the community spouse, the community spouse is allowed a
“community spouse resource allowance” of the couple’s assets. 42 U.S.C. § 1396r-5(f)(2).
The Arkansas Department of Human Services Medical Services Policy Manual defines
the “community spouse resource allowance” (“CSRA”) as the maximum amount of the
institutionalized spouse’s resources which may be transferred to the community spouse or to
another for the sole benefit of the community spouse. Ark. Admin. Code 016.20.1-3337.1.
Arkansas’s “community spouse maximum resources” (“CSMR”) is the total amount of
resources which may be considered available to the community spouse; this amount includes
resources held solely by the community spouse (in which the institutionalized spouse has no
ownership interest) and the CSRA. Id. At the time of the application, all resources held by
either the institutionalized spouse or the community spouse shall be considered available to
the institutionalized spouse to the extent that the resources exceed the CSMR. Ark. Admin.
Code 016.20.1-3337.4.
5
Cite as 2014 Ark. 251
In the instant case, Gordon was admitted to a long-term-care facility on July 29, 2010,
at which time he had been married to, and living in the same home with, Martha for forty-
six years. Hoping Gordon’s medical condition would improve, Martha did not apply for
Medicaid assistance until December 29, 2011. As part of the application process, the Pierces
indicated that they had, inter alia, two retirement accounts. The retirement accounts
consisted of an IRA and a 401(k), and both accounts were in Martha’s name only. As of the
date of the Medicaid application, Martha’s IRA account had a balance of $325,245.92, and
her 401(k) had a balance of $27,300.13. When calculating the couple’s total available
resources, a DHS caseworker included these two retirement accounts and found that the total
amount of resources held by Gordon and Martha at the time of the application was
$358,550.38, and that the CSMR was $109,560;3 therefore, the value of countable resources
for Gordon’s application was $248,990.38. Because the maximum amount of resources the
applicant may have and still be eligible for nursing-home-care benefits is $2,000, the
caseworker denied Gordon’s application.
Gordon appealed the denial of his application. In his brief and in oral arguments
before a DHS hearing officer, Gordon’s attorney contended that federal law exempted
Martha’s retirement accounts in calculating Gordon’s resources for purposes of Medicaid
eligibility. The hearing officer disagreed, finding that DHS had acted correctly when it
3
Pursuant to DHS’s long-term-care resource-eligibility worksheet, if the total
resources are under $21,912, the community spouse gets all. If the total resources are $21,912
to $43,824, the community spouse gets $21,912. If the total resources are $43,824 to
$219,120, the community spouse gets one-half. If the total resources are over $219,120 the
community spouse gets $109,560.
6
Cite as 2014 Ark. 251
determined that Martha’s IRA and 401(k) accounts were countable resources and not subject
to an exclusion. Gordon then filed a petition for judicial review with the circuit court. The
circuit court reversed and remanded, concluding that, based on the briefs and arguments of
counsel and the holding and discussion in Keip v. Wisconsin Department of Health & Family
Services, 606 N.W.2d 543 (Wis. Ct. App. 1999), DHS should not have counted against
Gordon’s Medicaid eligibility the retirement accounts owned by Martha.
Review of administrative agency decisions, by both the circuit court and the appellate
court, is limited in scope. E.g., Ark. State Highway & Transp. Dep’t v. Lamar Advantage Holding
Co., 2011 Ark. 195, at 4, 381 S.W.3d 787, 790. The standard of review to be used by both
the circuit court and the appellate court is whether there is substantial evidence to support
the agency’s findings. Id., 381 S.W.3d at 790. The appellate court’s review is directed, not
toward the circuit court, but toward the decision of the agency, because administrative
agencies are better equipped by specialization, insight through experience, and more flexible
procedures than courts, to determine and analyze legal issues affecting their agencies. Id., 381
S.W.3d at 790. When reviewing such decisions, we uphold them if they are supported by
substantial evidence and are not arbitrary, capricious, or characterized by an abuse of
discretion. Id., 381 S.W.3d at 790. We review issues of statutory interpretation de novo;
however, the interpretation placed on a statute or regulation by an agency or department
charged with its administration is entitled to great deference and should not be overturned
unless clearly wrong. Id., 381 S.W.3d at 790.
The only issue on appeal is whether, under federal law, retirement accounts owned
7
Cite as 2014 Ark. 251
by a community spouse may be countable resources when determining Medicaid eligibility
for an institutionalized spouse. MCCA provides as follows:
(a) Special treatment for institutionalized spouses
(1) Supersedes other provisions
In determining the eligibility for medical assistance of an institutionalized spouse (as
defined in subsection (h)(1) of this section), the provisions of this section supersede
any other provision of this subchapter (including sections 1396a(a)(17) and 1396a(f)
of this title) which is inconsistent with them.
...
(3) Does not affect certain determinations
Except as this section specifically provides, this section does not apply to--
(A) the determination of what constitutes income or resources, or
(B) the methodology and standards for determining and evaluating income and
resources.
42 U.S.C. § 1396r-5(a)(1), (3).
MCCA also specifically provides that the term “resources” does not include resources
excluded under 42 U.S.C. § 1382b(a) or (d) or resources that would be excluded under §
1382b(a)(2)(A) but for the limitation on total value described in that section. 42 U.S.C. §
1396r-5(c)(5). Section 1382b(a) and (d) specifically excludes, inter alia, the home, household
goods, personal effects, an automobile not in excess of an amount determined to be
reasonable by the Commissioner, funds set aside for burial expenses, and “other property
which is so essential to the means of self-support of such individual (and such spouse) as to
warrant its exclusion, as determined in accordance with and subject to limitations prescribed
8
Cite as 2014 Ark. 251
by the Commissioner of Social Security . . . .”
MCCA does not specifically exclude IRAs or 401(k)s. Likewise, the Arkansas
regulation does not specifically exclude IRAs or 401(k)s. See Ark. Admin. Code 016.20.1-
3332.3 (stating that the following items of personal property qualify for special exclusion
when specific conditions are met: (1) automobile, (2) life insurance policies, (3) household
goods and personal effects, (4) income producing and non-home property, (5) burial spaces
and funds; (6) SSI or SSA retroactive payments; and (7) funds from a class-action settlement
from the case of Susan Walker v. Bayer Corp.). Rather, the Arkansas regulation states that
resource items which do not meet conditions for exclusion will be included with countable
resources. Id.
DHS contends that, because the MCCA and the Arkansas regulation do not
specifically exclude IRAs and 401(k)s from the eligibility determination, the circuit court
erred in concluding that Martha’s retirement accounts were not countable resources. Gordon
acknowledges that there is no specific exclusion under the MCCA or the Arkansas
regulation, but he contends that because the MCCA is part of the Medicaid Act, this court
should look at the Medicaid-eligibility requirements when determining whether resources
are countable. Specifically, he contends that, pursuant to the “no more restrictive” provision
of the Medicaid Act, a state’s standards for determining an applicant’s Medicaid eligibility
may be no more restrictive than the eligibility requirements for SSI. Gordon maintains that,
under the SSI guidelines, Martha’s retirement accounts would have been excluded from an
SSI-eligibility determination; therefore, he contends that the accounts must be excluded from
9
Cite as 2014 Ark. 251
a Medicaid-eligibility determination. Gordon cites 20 C.F.R. § 416.1202(a), which provides,
in relevant part:
Married individual. In the case of an individual who is living with a person not eligible
[for SSI benefits] and who is considered to be the husband or wife of such individual
. . . , such individual’s resources shall be deemed to include any resources, not
otherwise excluded under this subpart, of such spouse whether or not such resources
are available to such individual. In addition to the exclusions listed in § 416.1210 , we
also exclude the following items:
(1) Pension funds that the ineligible spouse may have. Pension funds are defined as funds held
in individual retirement accounts (IRA), as described by the Internal Revenue Code, or in
work-related pension plans (including such plans for self-employed persons, sometimes referred
to as Keogh plans).
(Emphasis added.)
DHS, citing Houghton v. Reinerston, 382 F.3d 1162 (10th Cir. 2004), responds that the
MCCA renders the “no more restrictive” provision inapplicable. In Houghton, the State of
Colorado revised its Medicaid-eligibility guidelines used to calculate a married couple’s
resources when a spouse enters a nursing home and changed the way it classified self-funded
retirement accounts such as IRAs, 401(k)s, and 403(b)s. Id. at 1166. Prior to the revision,
Colorado did not classify self-funded retirement accounts held by the community spouse as
“resources” available to support the institutionalized spouse. Id. Then, Colorado began
classifying those retirement accounts as countable resources. Id. Plaintiffs challenged the
revision, contending that the new rule violated federal law because it was more restrictive
than the provisions for determining SSI eligibility. Id. at 1170–71. The Houghton court
rejected this argument, stating,
We agree that the Medicaid Act’s eligibility requirements (and therefore the MCCA’s
eligibility requirements unless otherwise explicitly noted) must be no more restrictive
10
Cite as 2014 Ark. 251
than the SSI eligibility requirements, but the SSI provides no guidance on the issue
raised here. Notably, § 416.1202(a) applies only when an SSI applicant is living with
his or her spouse. By definition, an institutionalized spouse and a community spouse
in the Medicaid context do not live together. We therefore conclude that neither the
SSI, nor its corresponding guidelines, address the eligibility requirements where one
spouse is institutionalized.
Id. at 1171 (emphasis in original).
The Supreme Court of New Jersey reached a similar conclusion in Mistrick v. Division
of Medical Assistance & Health Services, 712 A.2d 188 (N.J. 1998), another case relied on by
DHS. Even though the New Jersey Medicaid regulations did not specifically exclude a
community spouse’s pension plans and IRAs from the eligibility determination, the New
Jersey Superior Court, Appellate Division, held that pension plans and IRAs were required
to be excluded from the determination because of the “no more restrictive” methodology
provision. Id. at 192. The New Jersey Supreme Court reversed:
MCCA provides that it supersedes any other provision that is inconsistent with
it. 42 U.S.C.A. § 1396r-5(a)(1). MCCA further indicates that the term “resources”
does not include those items excluded from the definition of “resources” pursuant to
42 U.S.C.A. § 1382b(a) and (d). 42 U.S.C.A. § 1396r-5(c)(5). Those subsections do
not exclude IRAs or pension plans from the determination of “resources.” However,
the SSI regulation, 20 C.F.R. § 416.1202, excludes for purposes of determining SSI
eligibility IRAs owned by an SSI-ineligible spouse living in the same household. On
two grounds, however, we conclude that reliance on that SSI regulation is misplaced.
First, the regulation does not apply generally in determining SSI eligibility, but
applies only to exclude IRAs owned by ineligible spouses of SSI-eligible individuals
living in the same household. Its narrow application, therefore, does not render the
exclusion of IRAs in that specific circumstance a benchmark for determination of
eligibility in the case of medically needy or optionally categorically needy applications.
Second, even assuming the regulation excluding IRAs for purposes of SSI
eligibility had a broader scope, we find the methodology used in that regulation
inapplicable here because we conclude that the “no more restrictive” provision is
superseded by MCCA. MCCA explicitly provides that it supersedes any provision
11
Cite as 2014 Ark. 251
that is inconsistent with it. For purposes of determining medically needy or optionally
categorically needy eligibility, application of a methodology “no more restrictive”
than the SSI methodology set forth in 20 C.F.R. § 416.1202, which excludes IRAs,
would clearly be inconsistent with MCCA, which specifies by reference to 42
U.S.C.A. 1382b(a) and (d) what items are excluded from the determination of
resources, without excluding IRAs. In that context, the conclusion is inescapable that
MCCA supersedes the “no more restrictive” provision. See 42 U.S.C.A. §§
1396a(a)(10)(C)(i)(III), 1396a(r)(2)(A). Thus, MCCA requires the inclusion of the
community spouse’s IRA in the determination of the institutionalized spouse’s
resources.
The legislative history of MCCA supports our conclusion. The Senate
amendment to the House bill proposed an additional provision concerning the
treatment of resources that would have excluded “resources that are necessary to
produce income that is available to the community spouse or the family allowance.”
H.R. Conf. Rep. No. 100-661, at 263 (1988), reprinted in 1988 U.S.C.C.A.N. 923,
1041. However, the conference agreement “[did] not exclude from countable
resources those assets necessary to produce income available to the community spouse
or the family allowance.” 1988 U.S.C.C.A.N. at 1043. Instead, the agreement
provided that “either the institutionalized or the community spouse may request a fair
hearing as to whether the community spouse resource allowance is adequate to
generate sufficient income to raise the community spouse’s income to the minimum
monthly maintenance needs allowance.” Ibid. We are confident that had Congress
intended MCCA to exclude resources necessary to produce income, such as IRAs,
the proposed exclusion would have been adopted.
We repeat that the SSI regulation relied on by respondent, 20 C.F.R. §
416.1202, applies only to a spouse eligible for SSI benefits who is living with his or
her ineligible spouse. Respondent contends that she and her husband were living
together at the time of their resource assessment; the Division contends that they were
not. MCCA provides that the “snapshot” assessment of a couple’s resources and of the
community spouse’s share is computed “as of the beginning of the first continuous
period of institutionalization ... of the institutionalized spouse.” 42 U.S.C.A. §
1396r-5(c)(1). An institutionalized spouse is “an individual who ... is in a medical
institution or nursing facility ... and is married to a spouse who is not in a medical
institution or nursing facility.” 42 U.S.C.A. § 1396r-5(h)(1). Therefore, by definition
an institutionalized spouse cannot be living with a community spouse. However, we
note that the dispute between the parties concerning whether the Mistricks were
living together is academic. The question is not whether the SSI regulation
concerning spouses who live together actually applied, but whether MCCA
superseded the “no more restrictive methodology” provision. Whether the Mistricks
were living together at the time of their resource assessment is of no import because
12
Cite as 2014 Ark. 251
we conclude that the “no more restrictive” provision is inconsistent with and
therefore is superseded by MCCA.
Mistrick, 712 A.2d at 196–97 (alteration in original).
The Ohio Court of Appeals concurred, holding that a spouse’s IRA is a countable
resource under the MCCA and rejecting the argument that the “no more restrictive”
provision barred inclusion of an IRA. See Martin v. Ohio Dep’t of Human Servs., 720 N.E.2d
576 (Ohio Ct. App. 1998), abrogated on other grounds by Pack v. Osborn, 881 N.E.2d 237 (Ohio
2008). The Martin court explained:
As the New Jersey Supreme Court noted, the provision of the MCCA establishing
that it supersedes conflicting provisions of the federal code indicates that the MCCA
establishes a separate method of evaluating resources for Medicaid eligibility for
institutionalized spouses. The method established is generally much more lenient in
the exclusion of resources than SSI standards. To the extent that the MCCA is less
lenient, it was intended to remedy prior inequities between married couples created
by different recognition of whether assets were held in the name of one spouse or the
other. A rule that would exclude an IRA held by the community spouse would only
revitalize this old distinction by treating that couple more leniently than one in which
the institutionalized spouse held the IRA. We are not troubled, therefore, that the
MCCA might consider a resource available that is excluded under SSI standards.
Id. at 583; accord Mannix v. Ohio Dep’t of Human Servs., 731 N.E.2d 1154 (Ohio Ct. App.
1999) (rejecting argument that exclusion of IRA was mandated by 20 C.F.R. § 416.1202(a)).
For his part, Gordon urges this court to follow Keip, 606 N.W.2d 543, and hold that
the “no more restrictive” provision mandates that a community spouse’s retirement accounts
cannot be included as a countable resource when determining an institutionalized spouse’s
Medicaid eligibility. In Keip, Walter Keip entered a nursing home on October 17, 1996,
returned to his home before Christmas that year, and was readmitted to the nursing home
on April 23, 1997. Id. at 545. In June 1997, Walter’s wife, Caryl Keip, began the medical-
13
Cite as 2014 Ark. 251
assistance (“MA”) application process on Walter’s behalf. Id. Caryl learned that the Wisconsin
Department of Health and Family Services (“WDHFS”) intended to count her IRA as an
asset in determining Walter’s eligibility for MA and that the inclusion would render him
ineligible. Id. To accelerate Walter’s eligibility date, Caryl used about half of the funds in her
IRA to purchase an irrevocable fixed annuity. Id. This type of annuity did not count as an
asset for MA eligibility purposes. Id. Walter qualified for MA as of August 1997, but WDHFS
denied him benefits for the period prior to that month. Id.
The Wisconsin Court of Appeals determined that WDHFS erred in interpreting the
federal spousal-impoverishment provisions to require the inclusion of a community spouse’s
IRA when determining the MA eligibility of the institutionalized spouse. Id. The court
rejected WDHFS’s argument that Congress intended the resource exclusions enumerated in
the spousal-impoverishment provisions of the MCCA to supplant rather than supplement the
resource exclusions applicable in SSI-eligibility determinations. Id. at 550. The court
concluded that the SSI regulation at 20 C.F.R. § 416.1202(a) excluded Caryl’s IRA, noting
that under applicable MA eligibility criteria, the Keips were considered to have been living
together at the time of Walter’s first institutionalization in October 1996, notwithstanding
his temporary absence for care and treatment. Id. In addition, the court pointed out that
WDHFS’s decision to include Caryl’s IRA when determining Walter’s eligibility was
not based on guidance in the MA Handbook, Wisconsin’s medical-assistance manual, because
the MA Handbook’s appendix regarding “spousal impoverishment” specifically stated: “Don’t
count the following assets: . . . All assets not counted in determining SSI-related MA
14
Cite as 2014 Ark. 251
eligibility.” Id. at 549. Thus, the court noted that WDHFS’s decision to include Caryl’s IRA
as a countable resource for Medicaid eligibility was inconsistent with the guidelines stated in
the MA Handbook and that the MA Handbook “strongly implie[d] that the department had
previously concluded that an asset of either spouse excluded under federal SSI-eligibility
regulations must also be excluded when determining MA eligibility under the spousal
impoverishment provisions.” Id.
DHS contends that Gordon’s reliance on Keip is misplaced because Arkansas does not
have a provision in its regulation similar to the one in Wisconsin’s medical-assistance manual
that instructed personnel to exclude from consideration for medical-assistance eligibility any
assets that were excluded in determining SSI eligibility. Moreover, DHS contends that,
unlike Wisconsin, Arkansas has adopted the approach that all assets available to an individual
are considered countable resources unless specifically excluded by policy. See Ark. Admin
Code 016.20.1-3332.3 (stating that resource items which do not meet conditions for
exclusion will be included with countable resources). According to DHS, this method for
counting resources is consistent with the public policy of the State of Arkansas, as stated, in
relevant part, in Arkansas Code Annotated section 20-77-101(a) (Repl. 2001):
It is the intent of the General Assembly that the Medicaid medical assistance program
administered by the Department of Human Services is intended to be supplemental
to other potential sources of payment which are or may be available to pay for the
costs of medical care delivered to residents of this state. To ensure that the
appropriated funds are available to meet the needs of those residents, it is hereby
declared the public policy of the State of Arkansas that the program is the payor of last
resort to supplement and not supplant other sources which are or may be available to
any individual[.]
Finally, DHS contends that Congress, in enacting the MCCA, intended to leave to
15
Cite as 2014 Ark. 251
the states the determination of whether retirement accounts are countable resources. DHS
again points to the Houghton case, in which the Tenth Circuit concluded that,
unless an asset is specifically mentioned by the MCCA, the classification of that asset
for eligibility purposes depends on the federal Medicaid Act’s treatment of that asset.
Applying this rule to retirement accounts, we conclude that Congress did not
explicitly exclude retirement accounts when defining resources. Rather, we conclude
that Congress neither foreclosed nor mandated a particular classification for retirement
accounts.
Houghton, 382 F.3d at 1171.
After reviewing the legislative history of the MCCA and studying the persuasive
authority cited by the parties in this case, we conclude that the circuit court erred in finding
that DHS was not permitted to count against Gordon the retirement accounts owned by
Martha. Although the Medicaid Act’s eligibility requirements (and therefore the MCCA’s
eligibility requirements unless otherwise noted) must be no more restrictive than the SSI
eligibility requirements, the regulation at 20 C.F.R. § 416.1202(a) provides no guidance
when one spouse is institutionalized. See Houghton, 382 F.3d at 1171 (noting that §
416.1202(a) applies only when an SSI applicant is living with his or her spouse). Moreover,
even assuming the SSI regulation did provide some guidance, the MCCA supersedes any
provision that is inconsistent with it. Therefore, the “no more restrictive” provision is
inapplicable in this case. While we do not agree with the Mistrick court that the MCCA
requires the inclusion of the community spouse’s IRA in the determination of the
institutionalized spouse’s resources, see 712 A.2d at 197, we do agree with DHS’s assertion
that Congress has left it to each state to determine whether to include retirement accounts
in the computation of a couple’s resources. See Houghton, 382 F.3d at 1173 (“By not taking
16
Cite as 2014 Ark. 251
a clear position on the status of retirement accounts, Congress intended, through cooperative
federalism, to leave resolution of this complicated matter to the states.”). We conclude that
DHS’s policy of considering as countable resources a community spouse’s retirement
accounts does not violate federal law.
Reversed and remanded.
HOOFMAN, J., dissents.
CLIFF HOOFMAN , Justice, dissenting. Because I believe the majority errs in
reversing and remanding the circuit court’s order, I respectfully dissent. It is undisputed that
appellee Gordon Pierce (“Gordon”) had been married and lived with his wife, Martha Pierce
(“Martha”) for forty-six years prior to being admitted to a long-term-care facility on July 29,
2010, for health reasons. Rather than seeking Medicaid assistance immediately and hoping
that his condition would improve, Gordon waited until December 29, 2011, to apply for
assistance. It is undisputed that Gordon would have qualified for Medicaid benefits if the
two retirement accounts that were titled in Martha’s name only were not considered
countable resources. Therefore, as the majority correctly indicates, the sole issue on appeal
is whether a 401k and an IRA owned by a community spouse are countable resources under
federal law when determining Medicaid eligibility for an institutionalized spouse.
In the absence of any binding federal or Arkansas case law on this specific issue, and
rather than placing my reliance on Houghton v. Reinerston, 382 F.3d 1162 (10th Cir. 2004),
as the majority does, I find the analysis in Keip v. Wisconsin Department of Health & Family
Services, 606 N.W.2d 543 (Wis. Ct. App. 1999), more persuasive in this case.
17
Cite as 2014 Ark. 251
This court’s cardinal rule of statutory construction is to give effect to the intent of the
legislature. Barclay v. First Paris Holding Co., 344 Ark. 711, 42 S.W.3d 496 (2001). Where
the language of a statute is plain and unambiguous, we determine legislative intent from the
ordinary meaning of the language used. Id. When a statute is ambiguous, we must interpret
it according to legislative intent. Id. Our review becomes an examination of the whole act,
and we reconcile provisions to make them consistent, harmonious, and sensible in an effort
to give effect to every part. Id. We also look to the legislative history, the language, and the
subject matter involved. Id. We have also explained that literal meaning yields to legislative
intent if the literal meaning leads to absurd consequences contrary to legislative intent. Bank
of Eureka Springs v. Evans, 353 Ark. 438, 109 S.W.3d 672 (2003).
The majority aptly explains the background of the Medicaid program as it was enacted
in 1965 and the enactment of the Medicare Catastrophic Coverage Act of 1988 (“the
MCCA”), 42 U.S.C. § 1396r-5. In Arkansas Department of Human Services v. Schroder, this
court explained,
MCCA was designed “to protect the elderly and disabled population from the
financial disaster caused by catastrophic health care expenditures not currently
reimbursed under the Medicare and Medicaid programs.” H.R.Rep. No. 100–105,
pt. 2, at 65–68 (1998), reprinted in 1988 U.S.C.C.A.N. 803, 888. MCCA also
“sought to close the loophole where a couple could shelter their assets by transferring
them into the community spouse’s name while the institutionalized spouse received
Medicaid benefits.” Johnson v. Guhl, 166 F. Supp. 2d 42 (D.N.J. 2001).
353 Ark. 885, 890–91, 122 S.W.3d 10, 14 (2003).
Under 42 U.S.C. § 1396a(a)(10)(C)(i) and 42 U.S.C. § 1396a(r)(2)(A) of the Medicaid
Act, our state program can be “no more restrictive” in methodology for determining
18
Cite as 2014 Ark. 251
eligibility than the federal methodology employed under the Supplemental Security Income
(“SSI”) program, and the “methodology is considered to be ‘no more restrictive’ if, using the
methodology, additional individuals may be eligible for medical assistance and no individuals
who are otherwise eligible are made ineligible for such assistance.” 42 U.S.C.A. §
1382c(f)(1) provides,
For purposes of determining eligibility for and the amount of benefits for any
individual who is married and whose spouse is living with him in the same household
but is not an eligible spouse, such individual’s income and resources shall be deemed
to include any income and resources of such spouse, whether or not available to such
individual, except to the extent determined by the Commissioner of Social Security
to be inequitable under the circumstances.
Pursuant to this authority, the Commissioner has promulgated 20 C.F.R. § 416.1202, which
provides,
§ 416.1202 Deeming of resources.
(a) Married individual. In the case of an individual who is living with a person not
eligible under this part and who is considered to be the husband or wife of such
individual under the criteria in §§ 416.1802 through 416.1835 of this part, such
individual’s resources shall be deemed to include any resources, not otherwise
excluded under this subpart, of such spouse whether or not such resources are
available to such individual. In addition to the exclusions listed in § 416.1210, we also
exclude the following items:
(1) Pension funds that the ineligible spouse may have. Pension funds are defined as
funds held in individual retirement accounts (IRA), as described by the Internal
Revenue Code, or in work-related pension plans (including such plans for
self-employed persons, sometimes referred to as Keogh plans).
However, the MCCA, or “spousal impoverishment provisions,” was subsequently enacted,
and 42 U.S.C. § 1396r-5 provides the following relevant provisions:
§ 1396r-5. Treatment of income and resources for certain institutionalized spouses
19
Cite as 2014 Ark. 251
(a) Special treatment for institutionalized spouses
(1) Supersedes other provisions
In determining the eligibility for medical assistance of an institutionalized
spouse (as defined in subsection (h)(1) of this section), the provisions of this
section supersede any other provision of this subchapter (including sections
1396a(a)(17) and 1396a(f) of this title) which is inconsistent with them.
....
(3) Does not affect certain determinations
Except as this section specifically provides, this section does not apply to--
(A) the determination of what constitutes income or resources, or
(B) the methodology and standards for determining and evaluating
income and resources.
....
(5) Resources defined
In this section, the term “resources” does not include--
(A) resources excluded under subsection (a) or (d) of section 1382b of
this title, and
(B) resources that would be excluded under section 1382b(a)(2)(A) of
this title but for the limitation on total value described in such section.
42 U.S.C. § 1382b lists a number of specifically excluded items from resources, including a
home, household goods, personal effects, and an automobile. However, none of the listed
exclusions in this section include pensions or retirement accounts, nor does the section
specifically exclude pensions or retirement accounts. Thus, the issue in this case requires this
court first to decide whether the exclusion under the SSI regulations for an ineligible spouse’s
pension and IRA remains viable under the subsequently enacted spousal-impoverishment
provisions. I would conclude, as did the court in Keip and Houghton, that the provisions of
the spousal-impoverishment law are ambiguous in this respect.
The court in Keip resolved the ambiguity by looking to the legislative intent of the
MCCA as our rules of statutory construction would require us to do.
We conclude that the more reasonable interpretation is that Congress did not intend
20
Cite as 2014 Ark. 251
to make it more difficult for a community spouse to remain self-sufficient by requiring
that spouse to spend down or diminish the value of a pension fund or IRA in order
to render his or her institutionalized spouse eligible for MA [medical assistance or
Medicaid].
....
[T]he explanation contained in the House Report regarding the spousal
impoverishment provisions [states,] “The purpose of these revisions is to assure that
the community spouse in these circumstances has income and resources sufficient to
live with independence and dignity.” H.R. REP. No. 100–105(II), at 69 (1988),
reprinted in 1988 U.S.C.C.A.N. 803, 892.
Similarly, if we consider the scope and context of the spousal impoverishment
provisions enacted in 1988, it seems clear that congressional intent was to preserve
existing exclusions, while increasing the amount of assets a community spouse may
retain. Except as the new provisions “specifically” provide, the “determination of
what constitutes . . . resources” was not to change under the spousal impoverishment
provisions.
....
We fail to see how eliminating the exclusion for a spouse’s pension or IRA, an
exclusion that was explicitly recognized under SSI/MA eligibility rules prior to
enactment of the spousal impoverishment provisions, assists in “closing a loophole”
exploited by asset transfers between spouses. Employee pension funds and IRAs are
not readily transferable between spouses. They are thus not the type of assets that
could easily be retitled on the eve of the owning spouse’s institutionalization.
In summary, we conclude that the more reasonable interpretation of 42 U.S.C.
§ 1396r-5 is that the statute does not remove the exclusion for an IRA held by a
community spouse when an institutionalized spouse applies for MA. The ineligible
spouse’s IRA would be excluded in determining whether the applying spouse would
be eligible for SSI, and Wisconsin’s MA eligibility criteria may not be more restrictive
than federal SSI eligibility requirements. The spousal impoverishment provisions only
supersede those SSI eligibility criteria which are inconsistent with the provisions of
§ 1396r-5. In particular, the determination of what constitutes countable resources
for eligibility purposes is unaffected unless the section “specifically provides” for
different treatment. Nothing in § 1396r–5 specifically overrides the treatment of
spousal IRAs for purposes of MA eligibility determinations, and reading in a repeal
of the exclusion would be contrary to the primary purpose of the spousal
impoverishment provisions.
Keip, 606 N.W.2d at 549–51 (footnotes omitted).
21
Cite as 2014 Ark. 251
I agree with the analysis in Keip and the resolution of the ambiguity presented in
applying the required federal law for the purposes of determining medicaid eligibility. The
MCCA only supersedes those SSI eligibility criteria that are inconsistent with the provisions
of section 1396r-5, and section 1396r-5 does not specifically override the exclusion of spousal
pensions and IRAs for the purposes of Medicaid eligibility determinations. Furthermore,
because our state program must be “no more restrictive,” Martha’s IRA and 401k accounts
should not have been included as countable resources in determining Gordon’s eligibility.
To hold otherwise, as the majority does, would be inconsistent with the stated legislative
intent for the MCCA’s enactment.
Additionally, I do not agree with the majority’s conclusion that 20 C.F.R. §
416.1202(a) does not apply because Gordon was not “living with” his or her spouse. This
term is undefined in the regulation. However, it is undisputed that Gordon was married to,
and lived with, Martha for forty-six years, and he was only institutionalized for medical
reasons outside of his control. The majority appears to summarily conclude that “living
together” must require the spouses to physically be located under the same roof at the time
of the application for benefits. Therefore, the fact that Gordon delayed seeking Medicaid
eligibility for seventeen months after his institutionalization in the hopes that he would
recover and return home somehow now renders him ineligible because they were not “living
together” at the time of the application for benefits.
This literal interpretation, in my opinion, does not give effect to the intent of the
MCCA or the regulation. The consequences of the majority’s interpretation would allow
22
Cite as 2014 Ark. 251
an individual who applied for Medicaid eligibility before he or she was institutionalized or
immediately after he or she was institutionalized (thereby fitting under some definition of a
“temporary absence”) to qualify for benefits, but the interpretation would penalize and
exclude from eligibility an individual who waited to apply for the same benefits in the hopes
that he or she may return home and not need the benefits. In the past, this court has said
that it will not engage in interpretations that defy common sense and produce absurd results.
Shipley, Inc. v. Long, 359 Ark. 208, 216, 195 S.W.3d 911, 915 (2004). Rather, I would hold
that Gordon met the requirements of section 416.1202(a), excluding Martha’s retirement
accounts as countable resources, because it is consistent with the legislative intent “to assure
that the community spouse in these circumstances has income and resources sufficient to live
with independence and dignity.” H. R. Rep. No. 100–105(II), at 69 (1988), reprinted in
1988 U.S.C.C.A.N. 803, 892. As such, I would affirm the circuit court’s order reversing and
remanding the hearing officer’s order in this case.
Erasmo J. Reyes, Office of Policy and Legal Services, for appellant.
Taylor & Taylor Law Firm, P.A., by: Andrew M. Taylor and Tasha C. Taylor, for
appellee.
23