Amicus Curiae Brief — WisconsinDept. of Health and Family Servs. v. Blumer

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No. 00-952

In the Supreme Court of the United States

—— —— — — —

2 —U—4—. ==

WISCONSIN DEPARTMENT OF HEALTH AND FAMILY

SERVICES, PETITIONER

IRENE BLUMER

ON WRIT OF CERTIORARI

TO THE COURT OF APPEALS OF WISCONSIN, DISTRICT IV

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

THEODORE B. OLSON 7

Solicitor Genera!

Counsel of Record

STUART E. SCHIFFER

Acting Assistant Attorney

SHEREE R. KANNER General

Chief Counsel EDWIN S. KNEEDLER

Centers forMedicare & Deputy Soiicitor General

Medicaid Services 5 8

eee 1 JEFFREY A. LAMKEN

HENRY R. Gi LDBERG Assistant to the Solicitor

Deputy Chief Counsel General

Centers for Medicare & : :

ao WILLIAM KANTER

Medicaid Services — 1 —

. 5 BRUCE G. TORRESI

CAROLE F. KAGAN Attorneys

DAVID R. SMITH

> aa Je ‘tment o stic

Myra K. ERHARDT Department of Ju —

, Washington, D.C. 20530-0001

Attorneys oan >

‘ ; (202) 914-221;

De partment of Health and

Human Services

Washington, D.C. 20201

ALEX AZAR II

General Counsel

QUESTION PRESENTED

Through the Medicaid program, 42 U.S.C. 1396 et seq., the

federal government provides funding to the States for the

provision of medical services to eligible needy persons. This

case arises out of a special statutory provision, 42 U.S.C.

1396r-5 (1994 & Supp. V 1999), that establishes minimum

requirements for determining the eligibility of a married

individual who is institutionalized (such as in a nursing

home), but who has a spouse (the “community spouse”) who

is not. In particular, those provisions address the allocation

of income and resources between such spouses for purposes

of determining the institutionalized spouse’s Medicaid eligi-

bility and the extent of medical assistance. The question

presented is:

Whether, in-a “fair hearing” proceeding to consider

whether to raise the community spouse’s resource allowance

(CSRA) pursuant to 42 U.S.C. 1396r-5(e)(2C) in order to

protect additional income-generating resources to meet

the community spouse’s monthly maintenance needs, Wis-

consin's “income first” requirement, Wis. Stat. Ann.

§ 49.455(8)(d) (West 1997), which treats excess income of the

institutionalized spouse as available to the community

spouse, is consistent with the federal statute, 42 U.S.C.

1396r-5.

(I)

TABLE OF CONTENTS

Interest of the United States —

Statement

— — —

Summary of argument

Argument:

The Social Security Act permits consideration of

income available from an institutionalized spouse

when determining whether the community spouse

resource allowance should be increased

A. The text, structure, history, and administrative

interpretation of the MCCA establish that

States may use the income-first methodology ........

B. The Wisconsin Court of Appeals’ reasons for

rejecting the Secretary’s construction are

unpersuasive

7 15

Conclusion

Appendix A

Appendix B

Pees

TABLE OF AUTHORITIES

Cases:

Alcoa v. Central Lincoln Peoples’ Util. Dist.,

467 U.S. 380 (1984)

Batterton v. Francis, 432 U.S. 416 (19777

Boggs v. Boggs, 520 U.S. 833 (1997)

CFTC v. Schor, 478 U.S. 833 (1986)

Chambers v. Ohio Dep't of Human Servs., 145 F.3d

798 (6th Cir.), cert. denied, 525 U.S. 964 (1998) .......

Chevron U.S.A. Inc. v. Natural Res. Def. Council,

Inc., 467 U.S. 887 (1984)

Christensen v. Harris County, 529 U.S. 576

(2000)

Cleary v. Waldman, 167 F.3d 801 (3d Cir.), cert.

denied, 528 U.S. 870 (1999) “

(IID)

Cases—Continued: Page 42 U.S.C. 1396r-5(b)(2(A Mii) -..eeeeevesnsnneeenennseseennnereenen 24

Golf v. New York State Dep't of Soc. Servs., 697 42 U.S.C. 1396r-5(¢)(1) 7

N.E.2d 555 (N.Y. 1998) 14 42 U.S.C. 1396r-5(c)(1(A) 7

Haig v. Agee, 453 U.S. 280 (1981) 17 44 2

Harris v. McRae, 448 U.S. 297 (1980) 2 oan 7

Herweg v. Ray, 455 U.S. 265 (1982) 3, 16 2 U SC. 1396r-5(¢)(5) 6

Eukhard v. Reed, 481 U.S. 368 (1987) 20, 25 42 U.S.C. 1396r-5(d) 5, 12, 26

Morton v. Mancari, 417 U.S. 535 (1974) 16 42 U.S.C. 1396r-5(d)(1)-(5) ...... 25

Mourning v. Family Pubs. Serv., Inc., 411 U.S. 42 U.S.C. 1296r-5(d)(1)(A) 6

356 (1973) 17 42 U.S.C. 1896 -d 839 ——— 6, 12, 17,

Power Reactor Dev. Co. v. International 22, 23, 26, 27

Union of Elec., 367 U.S 396 (1961) 21 42 U.S.C. 1396r-5(d)(1(C) 6,17

Sarbe v. Bustos, 419 U.S. 65 (1974) 17 42 U.S.C. 1396r-5(d)(1)(D) 6

Schweiker v. Gray Panthers, 453 U.S. 34 (1881) 2.3.4 42 U.S.C. 1396r-5(d)(2) 6, 12, 17, 23, 26

Schweiker v. Hogan, 457 U.S. 569 (1982) ................ 14, 21, 30 — — — ea 7

Skidmore v. Swift & Co., 323 U.S. 134 (194) 21 2 US. C. 1396r-5(e)(2) -

Thomas v. Commissioner of the Div. of Med. Assis- 42 USC. 1396r-5(eX2\A) 7

tence, G88 N.E.3d 874 (Mass. 1997) 14 42 U.S.C. 1396r-5(eX2XC) passim

Udall v. Tallman, 380 U.S. 1 (1965) 20, 21 42 U.S.C. 1396r-5(f(1) 7

United States v. Mead Corp., 121 S. Ct. 2164 42 U.S.C. 1396-50002) 7,18

(2001) 20, 21 42 U.S.C. 1396r-5(f(2(A) 6,7,8

United States v. Wells, 519 U.S. 482 (1997) 16 42 U.S.C. 1396-5 Ali) 10

Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498 42 U.S.C. 1396r-5(f)(2)(A Mili) 8

(1990) 25 42 U.S.C. 1396r-5(f(2)(B) :

, 42 U.S.C. 1396r-5(g)

Statutes and regulation: 42 U.S.C. 1396r-5 note (§ 303(g)1)(B), 102 Stat. i

Medicare Catastrophic Coverage Act of 1988, 763) —

Pub. L. No. 100-360, Tit. ITI, § 303(a)(1)(B), 102 Social Security Act, ch. 531, 49 Stat. 620 (42 U.S.C.

Stat. 754 4 301 et geg.)

42 U.S.C. 1396r-5 (1994 & Supp. V 19990 4.11, 42 U.S.C. 40200 ) 28

17, 22, 27 42 U.S.C. 402(¢\(3) 28

42 U.S.C. 1396r-5(a)(3) 22 42 U.S.C. 40 e A) —

42 U.S.C. 1396r-5(b)(1) 5, 12, 15, 22, 24, 25 42 U.S.C. 402(f(3(A)

42 U.S.C. 1396r-5(b)(2) 5, 12, 24, 26 Social Security Amendments of 1965, Pub. L. No. 89-

42 U.S.C. 1396r-5(b)(2(A)-(D) 25 97, Tit. XIX, 79 Stat. 343 (42 U.S.C. 1396 et Se 2

42 U.S.C. 1396r-5(b)(2)(A (ii)

Statutes and regulation—Continued: Page

42 U.S.C. 1396a(a)(17) passi

42 U.S.C. 1396a(a)(17)(B) — 5 | 25

42 US.C. 1396a(a)(17)(D) 15

Social Security Amendments of 1972, Pub. L. No.

92-603, 86 Stat. 1470, 42 U.S.C. 1382b (1994 &

Supp. V 1999):

42 U.S.C. 1382b(a) (1994 & Supp. V 1999) 6

ee ee 6

29 U.S.C. 1055(a) 28

29 U.S.C. 1055(d)(1) 28

Wis. Stat. Ann. § 49.455(8)(d) (West 1997) 10

42 C. F. R. 435.723(d) (1980)

Miscellaneous: —

66 Fed. Reg. (2001):

p. 46,763

p. 46,765 » 9,1

p. 46,766 . 9,1

H.R. Conf. Rep. No. 661, 100th Cong., 2d Sess.

(1988) 3, 18, 24

H.R. Rep. No. 213, 89th Cong., Ist Sess. (1965) 15

“aa No. 105, 100th Cong., Ist Sess. Pt. 2

3,4

J. Thomas Oldham, Should the Surviving Spouse's

Forced Share Be Retained?, 38 Case W. Res. L.

Rev. 223 (1988) — 2

S. Rep. No. 404, 89th Cong., Ist Sess. Pt. 1 (1965) ............ 3,15

State Medicaid Manual (Oct. 1989) (available at http.

www.hefa.gov/pubforms/pub45pdf/sm3260.pdf) ) 20

In the Supreme Court of the United States

No. 00-952

WISCONSIN DEPARTMENT OF HEALTH AND FAMILY

SERVICES, PETITIONER

IRENE BLUMER

ON WRIT OF CERTIORARI

TO THE COURT OF APPEALS OF WISCONSIN, DISTRICT IV

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONER

INTEREST OF THE UNITED STATES

Medicaid is a means-based medical care program adminis-

tered by the States with federal financial assistance and

subject to federal standards. This case involves the special

eligibility requirements for Medicaid where one spouse

resides in an institutional setting, such as a nursing home,

and the other does not. At the Court’s invitation, the

Solicitor General filed an amicus brief on behalf of the

United States at the petition stage of this case.

STATEMENT

This case concerns the Medicaid eligibility of an applicant

(the “institutionalized spouse”) who lives in a nursing facil-

ity, while her husband (the “community spouse”) does not.

In such circumstances, Medicaid protects a certain portion of

the couple’s resources for the benefit of the community

spouse and seeks to ensure that the community spouse has

sufficient income to meet his monthly maintenance needs,

without rendering the institutionalized spouse ineligible for

Medicaid. The federal Medicaid statute establishes a special

“fair hearing” procedure in which a State may consider

whether to increase the amount of resources the statute

(1)

protects for the benefit of the community spouse if such an

increase is necessary to generate additional income to meet

the community spouse’s monthly maintenance needs.

The question in this case is whether, in determining

whether to increase the amount of protected resources, a

State may first consider whether the institutionalized spouse

could transfer income to the community spouse and thereby

bring his income up to the level set by statute to meet his

monthly needs, making it unnecessary to protect additional re-

sources. Under one calculation method, known as “income-

first,” States may consider such potential income transfers.

Under another method, known as “resources-first,” they

may not. The Wisconsin Court of Appeals held that the

Medicaid statute bars States from using the income-first

method, notwithstanding the consistent position of the Sec-

retary of Health and Human Services that the Medicaid

statute permits that method.

1. The Medicaid program, established in 1965

XIX of the Social Security Act, Pub. L. No. 89-97, 70 —

343, as amended 42 U.S.C. 1396 et seq., providles] federal

financial assistance to States that choose to reimburse cer-

tain costs of medical treatment for needy persons.” Harris

v. McRae, 448 U.S. 297, 301 (1980). Under the program,

lelach participating State develops a plan containing ‘rea-

sonable standards . for determining eligibility for and

the extent of medical assistance.“ Schweiker v. Gray Pan-

thers, 453 U.S. 34, 36 (1981) (quoting 42 U.S.C. 1396a(a\(17)).

State standards must “provide for taking into account only

such income and resources as are, as determined in accor-

dance with standards prescribed by the Secretary, available

to the applicant or recipient.” 42 U.S.C. 1396a(a)(17\(B); see

Gray Panthers, 453 U.S. at 42-43.

The income and resource caleulations necessary to make

eligibility determinations for married couples have proven to

bea matter of great complexity. When Congress established

the Medicaid program, Congress found it “proper to expect

spouses to support each other.” Gray Panthers, 453 U.S. at

45 (quoting S. Rep. No. 404, 89th Cong., Ist Sess., Pt. 1, 78

(1965)). Consistent with that judgment, “States adopted

plans that considered the spouse’s income in determining

Medicaid eligibility and benefits.” Jd. at 37. States thus cal-

culated the amount they “considered necessary to pay the

basic living expenses of” the non-applicant spouse “and

‘deemed’ any of the spouse’s remaining income to be ‘avail-

able’ to the applicant.” Id. at 38. In Gray Panthers, this

Court concluded that such an approach is consistent with the

text of the Social Security Act, the Act’s legislative history,

and the Secretary’s regulations. Id. at 44-48.

Before 1989, an individual in a nursing home (the “institu-

tionalized spouse”) with a spouse living in the community

(the “community spouse”) was often ineligible for Medicaid

until the institutionalized spouse exhausted resources that

were in her own name or were jointly held, without regard

to the needs of the community spouse. Moreover, even when

the institutionalized spouse became eligible for Medicaid,

much of her income would be used to reduce the amount that

Medicaid would pay for her institutional care, leaving the

community spouse with little means of support if he had

insufficient income of his own; States often reserved only

$250 to $350 per month—sometimes less—of the institu-

tionalized spouse’s income for the benefit of the community

spouse. See H.R. Rep. No. 105, 100th Cong., Ist Sess., Pt. 2,

68 (1987) (listing States). See also H.R. Conf. Rep. No. 661,

100th Cong., 2d Sess. 258 (1988). The net effect of those

1 In the program’s early years, some States apparently treated much

of the community spouse’s income as available to pay for the care of the

institutionalized spouse, even if the community spouse’s income was

modest. In 1974, the Secretary promulgated regulations that placed time

limits on the extent to which so-called “SSI States” (see H.R. Rep. No.

105, Pt. 2, at 65-66) could deem the community spouse’s income to be

available to the institutionalized spouse after the spouses no longer lived

See Herweg v. Ray, 455 U.S. 265, 269-270 (1982). Under those

together

regulations, SSI States generally had to disregard the community spouse's

requirements was the “pauperization” of many community

spouses. H.R. Rep. No. 105, Pt. 2, at 65.

Congress sought to alleviate that hardship and close po-

tential loopholes when it enacted the Medicare Catastrophic

Coverage Act of 1988 (MCCA), Pub. L. No. 100-360, Tit. III,

§ 303(a)(1)(B), 102 Stat. 754. See 42 U.S.C. 1396r-5 (1994 &

Supp. V 1999). In particular, Congress “attempted to strike

a balance between preventing impoverishment of the com-

munity spouse by excluding minimum amounts of resources

and income for that spouse from eligibility considerations,

and preventing a financially solvent institutionalized spouse

from receiving Medicaid benefits.“ Chambers v. Ohio Dep't

of Human Servs., 145 F.3d 793, 798 (6th Cir.), cert. denied,

525 U.S. 964 (1998). See H.R. Rep. No. 105, Pt. 2, at 65 (bill

seeks to “end thle] pauperization” of the community spouse

“by assuring that the community spouse has a sufficient—

but not excessive—amount of income and resources avail-

able”). That balance is achieved through a complex set of

minimum requirements for allocating income and resources

between community and institutionalized spouses.

a. Income. The MCCA separately addresses income allo-

cation for initial Medicaid eligibility determinations and for

post-eligibility determinations regarding the extent of assis-

tance to be furnished to persons who have already been

found eligible.

For initial eligibility determinations, the MCCA imposes a

single restriction regarding the attribution of income: “Dur-

ing any month in which an institutionalized spouse is in the

income in determining the institutionalized spouse’s eligibility in the first

month following the month in which the spouses stopped living together; if

both spouses were Medicaid eligible, the community spouse’s income had

to be disregarded after six months. See Gray Panthers, 453 U.S. at 39-40

(citing 42 C. F. R. 435.723(d) (1980)). So-called “Section 209(b)” States (see

H.R. Rep. No. 105, Pt. 2, at 66), however, could treat the community

spouse's income as available to the institutionalized spouse, after the two

— together, to the extent the State did so on January 1, 1972.

institution, * * * no income of the community spouse shall

be deemed available to the institutionalized spouse.”

42 U.S.C. 1396r-5(b)(1). Thus, subsection (b)(1) establishes a

special rule that protects the income of the community

spouse by excluding that income from consideration by the

State when determining whether the institutionalized

spouse is eligible for Medicaid. Subsection (b)(1), however,

does not address whether, when States initially determine

the eligibility of the institutionalized spouse, the institu-

tionalized spouse’s income may be considered to be available

to the community spouse for purposes of deciding whether

the latter will have sufficient income and resources to meet

his monthly maintenance needs.

With respect to post-eligibility determinations regarding

the extent of assistance, the MCCA provides more explicit

guidance. For example, subsection (b)(2) provides that, if

payment of income is made solely in the name of one spouse,

that income is generally treated as available only to the

named spouse. 42 U.S.C. 1396r-5(b)(2). That requirement is

called the “name-on-the-check” rule. Subsection (d) in turn

provides a number of exceptions to that rule to ensure that

the community spouse has sufficient income to meet his basic

monthly needs. Among other things, it establishes a “mini-

mum monthly maintenance needs allowance” or “MMMNA.”

42 U.S.C. 1396r-5(d)(3). The MMMNA for a community

spouse is relatively generous: Although the MMMNA sup-

ports only the community spouse while the other spouse is in

an institution, it is set at 150% of the poverty line for a

couple, plus an “excess shelter allowance” that reflects cer-

tain housing expenses to the extent they consume more than

30% of the 150% figure. 42 U.S.C. 1396r-5(d)(3) and (4).

If the income of the community spouse (as determined un-

der 42 U.S.C. 1396r-5(b)(2)) is less than the MMMNA, the

amount of the shortfall is “deducted” from the income of the

institutionalized spouse—reducing the amount of income that

would otherwise be considered available for the institutional-

ized spouse’s care—so long as that income is actually avail-

able to the community spouse. 42 U.S.C. 1396r-5(d)(1)(B) and

(2). The amount of that deduction is the “community spouse

monthly income allowance.” Ibid. The MCCA thus prevents

money the community spouse receives from the institutional-

ized spouse to meet his needs from also being considered

available for the care of the institutionalized spouse; it there-

by permits Medicaid to defray a greater portion of the costs

of institutionalized care than it otherwise would.”

b. Resources. The MCCA provides extensive rules re-

garding the attribution of resources (e.g., assets). First,

assets such as the family home, an automobile, and certain

other forms of personal property are excluded from the

definition of “resources” and thus are exempt from resource

limits. See 42 U.S.C. 1396r-5(c)(5), 1882b(a) and (b).

For initial eligibility determinations, the total of all of the

couple’s resources (whether owned jointly or separately) is cal-

culated as of the beginning of the institutionalized spouse’s

first period of institutionalization. One half of that total (the

“spousal share”) is allocated to each spouse. 42 U.S.C. 1396r-

5(c)(1)(A). Nevertheless, as a general rule, all of the re-

sources owned jointly by the couple or by either spouse sepa-

rately are considered available for the care of the institu-

tionalized spouse, 42 U.S.C. 1396r-5(c)(2)(A), but only to the

extent the value of those resources exceeds the amount pro-

tected under a special formula in Section 1396r-5(f)(2)A).

See 42 U.S.C. 1396r-5(c)(2)(B). By carving out that excep-

tion, the MCCA limits the extent to which the couple’s re-

sources must be exhausted before the institutionalized spouse

becomes Medicaid eligible, and protects those resources for

the benefit of the community spouse. The amount protected

under Section 1396r-5(f)(2)(A) is the greatest of: (i) $12,000

2 The State also must exclude a personal needs allowance, a family

allowance for certain family members residing with the community

spouse, and expenses incurred by the institutionalized spouse for (non-

covered) medical or remedial care. 42 U.S.C. 1396r-5(d)(1)(A), (C) and (D).

or a State standard up to $60,000, indexed for inflation under

subsection (g) (for 2001, the indexed ceiling amount is

$87,000); (ii) the lesser of the spousal share (computed under

subsection (c)(1)) or $60,000, indexed for inflation (now

$87,000); (iii) the amount set at a “fair hearing” under 42

U.S.C. 1396r-5(e)(2) (see pp. 7-9, infra); or (iv) the amount

transferred pursuant to a court order. 42 U.S.C. 1396r-

5(f)(2)(A). If the portion of the couple’s resources available

to the community spouse is less than the protected amount

under subsection (f)(2)(A), the institutionalized spouse may

transfer the difference—known as the “community spouse

resource allowance” or “CSRA”-—to the community spouse.

See 42 U.S.C. 13967-5(f)(1) and (2).

Once the institutionalized spouse is determined to be eligi-

ble, the resources of the community spouse are not consid-

ered in making post-eligibility determinations. 42 U.S.C.

1396r-5(c)(4).

ce. The “fair hearing” requirement and the income-first

and resources-first methods. Section 1396r-5(e) provides a

mechanism through which an institutionalized or community

spouse may challenge in a “fair hearing” the State’s deter-

mination of any of a number of elements in the statutory

formulae governing eligibility for or the extent of medical

assistance, including the community spouse monthly income

allowance and the CSRA. 42 U.S.C. 1396r-5(e)(2)(A). This

case involves Section 1396r-5(e)(2)(C), which addresses the

circumstances under which a State must replace the CSRA

with a different sum—in effect, increasing the CSRA—dur-

ing the “fair hearing.“

Section 1396r-5(e)(2)(C) provides in relevant part:

If either such spouse establishes that the community

spouse resource allowance (in relation to the amount of

8 Both the government and the courts have spoken of “increasing” or

“raising” the CSRA. Technically, the statute provides for another allow-

ance to be “substituted” for the CSRA. 42 U.S.C. 1396r-5(e)(2)(C). The

difference in terminology is not material.

income generated by such an allowance) is inadequate to

raise the community spouse’s income to the minimum

monthly maintenance needs allowance, there shall be

substituted, for the community spouse resource allow-

ance * * „ an amount adequate to provide such a

minimum monthly maintenance needs allowance.

In essence, Section 1396r-5(e)(2)(C) requires a comparison

between the income available to the community spouse, in-

cluding any income generated by resources protected under

subsection (f)(2)(A) for the benefit of the community spouse,

with the “minimum monthly maintenance needs allowance”

or MMMNA. If the former is less than the latter, the CSRA

may be increased.‘ Permitting the community spouse to re-

tain (or obtain fre:a the institutionalized spouse) additional

income-generating resources helps enable the community

spouse’s total income to meet the MMMNA. Absent an adjust-

ment under subsection (e)(2)(C), those additional resources

would be considered available to the institutionalized spouse

in determining her Medicaid eligibility, and might have to be

exhausted before the institutionalized spouse could become

eligible.

4 Although Section 1396r-5(e)(2)(C) speaks of replacing the “com-

munity spouse resource allowance,” the CSRA technically is only one com-

ponent of the total amount of resources protected under the MCCA. The

MCCA defines the CSRA as the difference between the sums that can be

protected (e.g., $60,000, adjusted for inflation) and “the amount of the

resources otherwise available to the community spouse (determined

without regard to such an allowance).” 42 U.S.C. 1396r-5(f)(2)(A) and (B).

At the same time, however, the statute sometimes treats the phrase “com-

munity spouse resource allowance” as a short-hand term for the total

amount of protected resources under 42 U.S.C. 1396r-5(f)(2)(A). Accord-

ingly, although Section 1396r-5(e)(2)(C) itself speaks in terms of increasing

the CSRA, the Secretary has interpreted Section 1396r-5(e)(2)(C) as

authorizing an increase in the resources protected by subsection (f)(2)(A).

See Pet. App. 80a. That treatment comports with 42 U.S.C. 1396r-

5(f)(2)(A)(iii), which provides that the total amount of resources that may

be protected for a community spouse may be set at a fair hearing.

The issue in this case is what income a State may regard

as available to the community spouse when determining

whether to increase the CSRA under Section 1396r-

5(e)(2)(C). There are two basic approaches. Under the

“income-first” method, income of the institutionalized spouse

that could be made available to support the community

spouse is allocated to the community spouse for purposes of

determining whether the community spouse has sufficient

income to meet the MMMNA. The CSRA is not increased

unless the community spouse’s income will not meet the

MMMNA after taking into account any income that may be

made available from the institutionalized spouse. In con-

trast, under the “resources-first” approach, the CSRA is in-

creased to the extent necessary to ensure that the com-

munity spouse’s total income meets the MMMNA without

first considering the extent to which income from the institu-

tionalized spouse could be made available to the community

spouse. In general, the income-first method makes it less

likely that the CSRA will be increased; it thus tends to

require couples to expend additional resources before the

institutionalized spouse becomes Medicaid eligible.

The Department of Health and Human Services (HHS)

has stated in memoranda and letters that 42 U.S.C. 1396r-

5(e)(2)(C) authorizes consideration of potential income trans-

fers from the institutionalized spouse to the community

spouse, so that States may adopt the income-first method.

See Pet. App. 8la-90a (reproducing letters and memoranda);

see also 66 Fed. Reg. 46,763, 46,765 (2001) (App., infra, 25a,

32a) (Secretary has in the past “permitted States to employ

income-first or other reasonable methodologies”). On Sep-

tember 7, 2001, the Secretary issued a Notice of Proposed

Rulemaking proposing regulations that would codify the Sec-

retary’s policy of permitting States to use either methodol-

ogy as a “reasonable” state-promulgated “standard[] * * * for

determining eligibility for * * * medical assistance” under 42

U.S.C. 1396a(a)(17). See 66 Fed. Reg. at 46,765, 46,766

(App., infra, 32a, 37a). The State of Wisconsin has, by

statute, adopted the income-first method. Wis. Stat. Ann.

§ 49.455(8)(d) (West 1997); Pet. App. 76a. A majority of

other States have also adopted the income-first method. See

U.S. Amicus Br. Pet. Stage at 11 n.4.

2. Respondent Irene Blumer was admitted to a nursing

facility in 1994 and applied for Medicaid through her hus-

band, Burnett Blumer, in 1996. The Green County Depart-

ment of Human Resources concluded that, as of respondent’s

institutionalization in 1994, the couple had $145,644 in

resources. The County calculated the amount of the couple’s

resources that could be protected for Mr. Blumer to be half

the couple’s resources, $72,822. See Pet. App. 28a; see also

42 U.S.C. 1396r-5(f)(2)(A)(ii) (one measure of protected

amount is lesser of spousal share or $60,000, as adjusted for

inflation). Respondent, as the institutionalized spouse, was

permitted to retain only $2000 in resources. The County

determined that, as of the date of respondent’s application

for Medicaid in 1996, the couple’s assets totaled $89,335.

That was approximately $14,500 above the resource eligibil-

ity threshold of $74,822 ($72,822 for Mr. Blumer and $2000

for respondent). Pet. App. 24a-25a; see also id. at 2a.

Respondent sought a fair hearing pursuant to 42 U.S.C.

1396r-5(e)(2)(C). The hearing examiner concluded that, if re-

spondent’s income (the income of the institutionalized spouse)

were excluded from consideration, Mr. Blumer’s total monthly

income would be $1702.45, approximately $25 less than the

MMMNA of $1727. Pet. App. 25a, 30a; see also id. at 2a-3a.

Accordingly, respondent argued that, under 42 U.S.C. 1396r-

5(e)(2)(C), the CSRA should be raised to generate $25 per

month in additional income for Mr. Blumer. Pet. App. 3a.

The hearing examiner concluded that respondent had

monthly income of $1262.71, and that the couple’s combined

income therefore exceeded $2900 per month. Pet. App. 30a-

31a. Using the income-first method required by Wisconsin

law and permitted by HHS guidance, the hearing examiner

found that Mr. Blumer's income could be raised to the

MMMNA level by allocating $25 per month to him from the

income of respondent. Jd. at 3la; see also id. at 3a.

Accordingly, the hearing examiner declined to increase the

CSRA. Id. at 3la-32a. The effect of the decision was to

defer respondent’s eligibility for Medicaid until the $14,500

in excess resources were exhausted (on, for example, respon-

dent’s care or Mr. Blumer’s needs).

3. Respondent appealed, and the Green County Circuit

Court affirmed. Pet. App. 19a-22a. The Wisconsin Court of

Appeals, however, reversed. Id. at la-17a. In that court’s

view, Section 1396r-5(e)(2)(C) unambiguously mandates the

resources-first method, i.e., that the CSRA be adjusted up-

ward to generate additional income to help Mr. Blumer meet

the MMMNA, without considering whether respondent, his

institutionalized spouse, could make income available to him.

Id. at Ila. The Wisconsin Supreme Court denied the State’s

petition for discretionary review. Id. at 18a.

SUMMARY OF ARGUMENT

States participating in the Medicaid program must estab-

lish “reasonable standards * * * for determining eligibility for

and the extent of medical assistance.” 42 U.S.C. 1396a(a)(17).

This case concerns whether Wisconsin’s method for deter-

mining Medicaid eligibility is permissible in light of the

MCCA, 42 U.S.C. 1396r-5. Under 42 U.S.C. 1396r-5(e)(2)(C),

a state examiner conducting a “fair hearing” may increase

the community spouse resource allowance (CSRA) if the

income generated by the CSRA otherwise would be “in-

adequate” to raise the community spouse’s income to the

minimum monthly maintenance needs allowance (MMMNA)

set by statute. The Secretary has determined that States, in

deciding whether to increase the CSRA, may count as part

of the community spouse’s income any income the insti-

tutionalized spouse could make available to the community

spouse. That method is known as “income first.”

A. The Medicaid program permits use of the income-first

method. When Congress established the Medicaid program,

it incorporated the background principle that spouses are

responsible for each others’ care. Schweiker v. Gray Pan-

thers, 453 U.S. 34, 36 (1981). The MCCA establishes a lim-

ited exception by precluding income of the community

spouse from being treated as available to the institutional-

ized spouse. 42 U.S.C. 1396r-5(b)(1). On the other hand, the

MCCA nowhere prohibits income of the institutionalized

spouse from being considered available to the community

spouse when determining eligibility, as occurs under the

income-first method invalidated by the Wisconsin court. The

fact that Congress did not specifically prohibit that practice

is strong evidence that the MCAA allows States to utilize it,

and thus to adhere to the background principle that spouses

may be expected to support each other. The legislative

history of the MCCA also supports that conclusion, as does

the Secretary’s longstanding construction of the Act.

B. In rejecting that interpretation, the Wisconsin Court

of Appeals relied on the fact that Congress expressly pro-

vided for States, in post-eligibility determinations regarding

the extent of assistance, to account for transfers of income

made by the institutionalized spouse to help the community

spouse achieve the MMMNA, 42 U.S.C. 1396r-5(d)(1)(B) and

(2), but that Congress did not include that requirement for

initial eligibility determinations. The fact that the MCCA

specifically accommodates transfers of income from the insti-

tutionalized spouse to the community spouse to bring the

community spouse’s income up to the MMMNA for post-

eligibility purposes, however, underscores the reasonable-

ness of taking the possibility of such transfers into account

when calculating the income available to the community

spouse pre-eligibility. Moreover, almost all of the MCCA’s

income-attribution rules are mandatory only for “post-

eligibility income determination{s)” regarding the extent of

assistance. 42 U.S.C. 1396r-5(b)(2) and (d). Under the court

of appeals’ approach, Congress’s failure to require States to

use those income-attribution rules for initial eligibility deter-

minations would bar the States from adapting them for that

purpose. Yet the resources-first methodology preferred by

the Wisconsin Court of Appeals itself borrows some of those

post-eligibility rules for purposes of making initial eligibility

The Wisconsin Court of Appeals also expressed concern

that the income-first method might leave a community

spouse with less income than he needs (or than the MMMNA

provides) after the death of the institutionalized spouse. In

most benefits and pension contexts, however, the surviving

community spouse would be entitled to receive a significant

portion of the payments that would otherwise have gone to

the institutionalized spouse during her life. Moreover, the

institutionalized spouse’s death eliminates the costs of her

care—costs that previously absorbed much of her income.

Consequently, the net effect following the institutionalized

spouse’s death may often be an increase in the income avail-

able to the community spouse. The MMMNA, in any event,

is not the proper measure of the community spouse’s needs

after the institutionalized spouse’s death, since it is set at a

level appropriate to a couple. Finally, the court of appeals

ignored the fact that increasing the resources protected for

the community spouse necessarily diverts scarce Medicaid

funds from potentially needier persons in order to benefit

potentially wealthier community spouses.

ARGUMENT

THE SOCIAL SECURITY ACT PERMITS CONSID-

ERATION OF INCOME AVAILABLE FROM AN INSTI-

TUTIONALIZED SPOUSE WHEN DETERMINING

WHETHER THE COMMUNITY SPOUSE RESOURCE

In establishing the Medicaid program, Congress focused

principally on assisting those “persons who were most im-

poverished.” Schweiker v. Hogan, 457 U.S. 569, 590 (1982).

Under the program, “[eJach participating State develops a

plan containing ‘reasonable standards for determining

eligibility for and the extent of medical assistance,’” and an

“individual is entitled to Medicaid if he fulfills the criteria

established by the State in which he lives.” Schweiker v.

Gray Panthers, 453 U.S. 34, 36-37 (1981) (quoting 42 U.S.C.

1396a(a)(17)). State standards may “provide for taking into

account only such income and resources as are, as deter-

mined in accordance with standards prescribed by the Secre-

tary, available to the applicant or recipient.” 42 U.S.C.

1396a(a)(17)(B); Gray Panthers, 453 U.S. at 42-43.

This case concerns whether the standards established by

the State of Wisconsin are consistent with requirements

added by the Medicare Catastrophic Coverage Act of 1988

(MCCA). The fundamental difference between the two ap-

proaches at issue—income-first and resources-first—is

whether potential income transfers to the community spouse

from the institutionalized spouse may be taken into account

when deciding whether to increase the community spouse

resource allowance (CSRA). Rejecting the views of the

Secretary, Pet. App. 8la-9la, two federal courts of appeals,

Cleary v. Waldman, 167 F.3d 801 (3d Cir.), cert. denied, 528

U.S. 870 (1999); Chambers v. Ohio Dep't of Human Servs.,

145 F.3d 793, 799 (6th Cir.), cert. denied, 525 U.S. 964 (1998),

and the highest courts of two States, Golf v. New York State

Dep't of Soc. Servs., 697 N.E.2d 555 (N.Y. 1998); Thomas v.

Commissioner of the Div. of Med. Assistance, 682 N.E.2d

874 (Mass. 1997), the Wisconsin Court of Appeals held that

the MCCA prohibits the income-first method used by most

States, under which such potential income transfers are con-

sidered. Instead, that court held, the MCCA unambiguously

requires use of the resources-first method. In so holding, the

court of appeals misconstrued the Act, inappropriately sub-

stituted its own views for the reasoned and consistent ap-

proach of the federal agency to which Congress entrusted

the statute for administration, and usurped the discretion

that Congress afforded the States in this program of

cooperative federalism.

A. The Text, Structure, History, And Administrative

Interpretation Of The MCCA Establish That States

May Use The Income-First Methodology

1. In enacting the Medicaid program, Congress pro-

ceeded on the premise that “it is proper to expect spouses to

support each other.” S. Rep. No. 404, 89th Cong., Ist Sess.,

Pt. 1, 78 (1965); see also H.R. Rep. No. 213, 89th Cong., Ist

Sess. 68 (1965). Thus, Congress prohibited States from

takling] into account the financial responsibility of any

individual for any applicant * * * wnless such applicant or

recipient is such individual’s spouse” or minor child. 42

U.S.C. 1396a(a)(17)(D) (emphasis added). In view of that

statutory text, the Secretary and the States for decades

deemed each spouse’s income and resources to be available

for the care of the other, whether or not they were actually

furnished, subject to such regulatory restrictions as might be

adopted by the Secretary. See pp. 2-4 & note 1, supra.

Upholding that construction in Gray Panthers, this Court

concluded that “Congress treated spouses differently from

most other relatives by explicitly authorizing state plans to

‘take into account the financial responsibility’ of the spouse.”

453 U.S. at 47 (quoting 42 U.S.C. 1396a(a)(17)(D)).

In enacting the MCCA in 1988, Congress modified that

general rule in part. The MCCA provides that, Id luring any

month in which an institutionalized spouse is in the institu-

tion, no income of the community spouse shall be

deemed available to the institutionalized spouse. 42 U.S.C.

1396r-5(b)(1). The MCCA thus forbids the community

spouse’s income, even if potentially transferrable, from being

deemed available to the institutionalized spouse. But it no-

where precludes the Secretary or the States from treating

excess income of the institutionalized spouse as available to

the community spouse in making initial eligibility determin-

ations, as occurs under the income-first method. The most

natural inference to be drawn from that omission is that

Congress did not intend to preclude States from treating the

income of institutionalized spouses as available to provide

financial support for community spouses where that is nec-

essary to raise the income of the community spouse to the

minimum monthly maintenance needs allowance (MMMNA).

See 66 Fed. Reg. at 46,766 (App., infra, 34a) (Secretary’s

conclusion that omission “supports an inference that it is per-

missible to consider all or some portion of the institutional-

ized spouse’s income to be available to the community

spouse”). The soundness of treating excess income of the

institutionalized spouse as available for maintaining the

household used by the community spouse is reinforced by

the fact that the MMMNA is set at 150% of the poverty level

for a couple. See 42 U.S.C. 1396r-5(d)(3).

Moreover, when Congress revisited the general subject of

spousal attribution in 1988 and adopted the specific income-

attribution rules in the MCCA, it acted against a background

that included not merely a longstanding agency construction

and settled state practices of presuming or requiring spouses

to support each other (subject only to certain limits set by

the Secretary, see pp. 2-4 & note 1, supra), but also express

statutory support for that approach and this Court’s deci-

sions in Gray Panthers and Herweg v. Ray, 455 U.S. 265

(1982), upholding it. Cf. United States v. Wells, 519 U.S. 482,

495 (1997); Morton v. Mancari, 417 U.S. 535, 551 (1974).

These circumstances make all the more compelling the con-

clusion that Congress’s enactment of a specific prohibition

against deeming the community spouse’s income to be avail-

able to the institutionalized spouse, and its failure to adopt

any reciprocal prohibition against considering the institu-

tionalized spouse’s income as available to the community

spouse, leaves the States free to apply the background prin-

ciple of spousal support when deciding whether to protect

additional resources for the community spouse. See Saæbe v.

Bustos, 419 U.S. 65, 74 (1974); CFTC v. Schor, 478 U.S. 833,

846 (1986); Haig v. Agee, 453 U.S. 280, 297-298 & n.37 (1981).

Indeed, for post-eligibility determinations regarding the

extent of assistance, Congress expressly provided for the

income of the institutionalized spouse to be used to support

the community spouse. See 42 U.S.C. 1396r-5(d)(1)(C) and

(2) (where community spouse’s income is less than MMMNA,

difference is deducted from institutionalized spouse’s income

for post-eligibility purposes, to the extent such amount is

actually made available to the community spouse). It follows

that a state standard that anticipates such transfers for eligi-

bility purposes (when deciding whether to protect additional

resources) is at least a “reasonable standard{]}* * * for

determining [Medicaid] eligibility,” 42 U.S.C. 1396a(a)(17)

(emphasis added). Compare Mourning v. Family Pubs.

Serv., Inc., 411 U.S. 356, 372-373 (1973). In determining

whether to increase the CSRA in a fair hearing under sub-

section (e)(2)(C)—where the task is to determine whether

the community spouse has sufficient income to meet his

needs—the State must determine what income is available

to support the community spouse. It would be perverse to

construe Section 1396r-5 to require the hearing officer to

ignore the income of the institutionalized spouse in making

that determination when another provision of the same

enactment expressly contemplates that some portion of the

institutionalized spouse’s income may be made available to

the community spouse for that very purpose.

The structure of the MCCA as a whole, in fact, suggests

that transfers from institutionalized spouses to community

spouses are the ordinary method of bringing the community

spouse’s income up to the MMMNA. Congress provided an

express and precise formula that can be used to account for

such transfers for post-eligibility purposes without resort to

a hearing. 42 U.S.C. 1396r-5(d)(1)(B) and (d)(2). In addition,

Congress provided a precise formula for determining the ex-

tent resources may be protected through the CSRA. 42

U.S.C. 1396r-5(f)(2). In contrast, increases in the community

spouse’s income through an adjustment to the CSRA can be

achieved only by invoking an exception to the statutory

CSRA formula; the exception requires use of a hearing pro-

cess; and the amount of any increase is not governed by a

precise formula. It can be inferred from this structure that

Congress anticipated that the community spouse ordinarily

would “have his or her resources and income protected in the

manner dictated by” the MCCA’s “precise and detailed for-

mula{e],” and that departure from the statutory CSRA

through “fair hearings” would occur only where those formu-

lae cannot “provide the protection that Congress contem-

plated.” See Pet. App. 81a (1993 HCFA memorandum).

2. The legislative history supports the conclusion that

the income-first method is permissible. Addressing the very

provision at issue here, the Conference Report declares:

If the State, after such a hearing, determines that the

community spouse resource allowance is inadequate, the

State must allow the community spouse to retain an ade-

quate amount of resources to provide the minimum

monthly maintenance needs allowance (taking into

account any other income attributable to the community

spouse), notwithstanding the amount of the State-

established resource allowance.

H.R. Conf. Rep. No. 661, 100th Cong., 2d Sess. 265 (1988)

(emphasis added); see also id. at 267 (similar). The Confer-

ence Report thus demonstrates that Congress understood

that there might be “other income attributable to the com-

munity spouse” that a State may consider when determining

whether to raise the CSRA.

3. Consistent with the foregoing analysis, the Secretary

has long interpreted the MCCA as permitting States, in

establishing “reasonable standards * * * for determining

eligibility,” 42 U.S.C. 1396a(a)(17), to take into account

income of an institutionalized spouse that may be made

available to the community spouse when deciding whether to

increase the CSRA. In 1993, the Health Care Financing

Administration (HCFA)—now known as the Centers for

Medicare and Medicaid Services (CMS)—advised States that

they may require “that the institutionalized spouse

* * * first make available the maximum amount of income

he or she can as a community spouse monthly income allow-

ance * before being allowed to raise the [CSRA],” and

that States “have the discretion to determine the maximum

amount of income that the institutionalized spouse can afford

to protect for the community spouse.” Pet. App. 81a; see

also Pet. App. 86a (Mar. 1994) (“States have the option to use

the ‘income first’ rule or to apply some cther reasonable”

methodology); Pet. App. 89a (July 1994) (same); Pet. App.

90a (Mar. 1996) (Letter from Secretary Shalala stating that

Ohio’s income-first policy is “legally permissible”).

As the Secretary recently explained in proposing a regu-

lation to formally codify that rule:

We have previously issued policy memoranda and

letters expressing our view that [42 U.S.C. 1396r-

5(e)(2)(C)] authorizes a State to consider potential in-

come transfers from an institutionalized spouse to a com-

munity spouse, so that a State may adopt the income-

first method or apply some other reasonable methodol-

ogy * * *. In other words, consistent with the statutory

requirement that State[s] utilize “reasonable standards”

for determining eligibility and the amount of benefits as

described in [42 U.S.C. 13896a}(a)(17), we have permitted

States to employ income-first or other reasonable meth-

odologies.

66 Fed. Reg. at 46,765 (App., infra, 3la-32a). Indeed, a

provision of the State Medicaid Manual—issued days after

the MCCA provisions became effective—explains that, in

deciding whether to substitute another amount for (i.e.,

increase) the CSRA, At here are no substitutions when insti-

tutionalized spouses do not make available monthly income

allowances to community spouses.” State Medicaid Manual

§ 3262.3 (Oct. 1989) (available at http://www.hcfa.gov/

pubforms/pub45pdf/sm3260.pdf)’; see also Pet. App. 85a-

86a, 88a (HCFA memoranda discussing Manual § 3262.3).

In construing an Act of Congress entrusted to an agency

for administration, courts must give respectful consideration

to the views of the agency when, as here, Congress has not

itself “directly spoken to the precise question at issue.”

Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467

U.S. 837, 842 (1984). See Udall v. Tallman, 380 U.S. 1, 16

(1965); United States v. Mead Corp., 121 S. Ct. 2164, 2175

(2001) (remanding court of appeals decision made without

any regard to agency’s letter ruling). This Court, in fact, has

accorded Chevron-like deference to the Secretary’s view on

issues like this one, even when that view is expressed in

informal memoranda and letters. In Lukhard v. Reed, 481

U.S. 368 (1987), a majority of this Court agreed that the

Secretary’s view—there, that the Social Security Act per-

mits but does not require States to treat tort awards as in-

come when determining eligibility—“is entitled to defer-

ence,” even though that view was expressed only in letters

and memoranda. Id. at 378 (plurality); id. at 383 (Blackmun,

J., concurring) (emphasizing deference). See also Mead, 121

S. Ct. at 2176 & n.17 (identifying cases in which agency

views expressed in informal or non-binding formats were not

given “Chevron-style” deference); Christensen v. Harris

County, 529 U.S. 576, 586 (2000).

In any event, considering “the degree of the agency’s care,

its consistency, formality, and relative expertness, and * * *

the persuasiveness of [its] position,” there can be little doubt

that the agency’s longstanding views are entitled to substan-

5 The Manual provision is dated 10-89.“ The relevant provisions of

the MCCA apply only where a spouse has been continuously institu-

tionalized on or after September 30, 1989. Pub. L. No. 100-360,

§ 303(g)(1)(B), 102 Stat. 763.

tial weight here. Mead, 121 S. Ct. at 2171. See Skidmore v.

Swift & Co., 323 U.S. 134, 140 (1944). The Secretary’s views

have been consistent. See 66 Fed. Reg. at 46,765 (App.,

infra, 31a-32a); Pet. App. 81a-90a. Respect is Iplartieularly

* * * due when,” as here, “the administrative practice at

stake ‘involves a contemporaneous construction of a stat-

ute. Udall, 380 U.S. at 16 (quoting Power Reactor Dev. Co.

v. International Union of Elec., 367 U.S. 396, 408 (1961)).

And, in light of the extreme complexity of the Act’s inter-

locking provisions, the need for the Secretary’s expertise is

at its apogee. See Hogan, 457 U.S. at 571; Alcoa v. Central

Lincoln Peoples’ Util. Dist., 467 U.S. 380, 390 (1984).

B. The Wisconsin Court Of Appeals’ Reasons For Reject-

ing the Secretary’s Construction Are Unpersuasive

1. The Wisconsin Court of Appeals’ primary reason for

rejecting the Secretary’s conclusion that the MCCA allows

States to use the income-first approach was its view that the

MCCA unambiguously forbids consideration of potential in-

come transfers from the institutionalized spouse to the com-

munity spouse when deciding whether to raise the CSRA.

To support that view, the court of appeals relied on the fact

that Section 1396r-5(e)(2)(C) “very specifically directs the

increase” of the CSRA “to an amount sufficient to generate

additional income to meet” the MMMNA. Pet. App. 1la.

That observation, however, merely begs the question in this

case. In deciding whether the unadjusted CSRA “is inade-

quate * * * to raise the community spouse’s income” to the

MMMNA for purposes of Section 1396r-5(e)(2)(C), the State

necessarily must calculate “the community spouse’s income.”

The MCCA does not define the phrase “community spouse’s

income,” and it provides no rules regarding which potential

income sources may be counted in determining that income’s

adequacy. In particular, subsection (e)(2)(C) does not

address whether, in determining the adequacy of the com-

munity spouse’s income, it is permissible to consider poten-

tial income transfers from the institutionalized spouse to the

community spouse. Contrast 42 U.S.C. 1396r-5(b)(1) (bar-

ring consideration of community spouse income as available

to the institutionalized spouse); pp. 15-17, supra. As one

court has explained, the view adopted by the Wisconsin

Court of Appeals fails to confront the question whether “a

community spouse’s ‘income’ includes—or does not include

—any transfer of income from the institutionalized spouse.”

Chambers, 145 F.3d at 799. Whether such potentially “trans-

ferred income is included” is what distinguishes between

“the two possible approaches” (income-first and resources-

first) “used to implement subsection (e)(2)(C).” Ibid.

On that issue, the MCCA is silent. Chambers, 145 F.3d at

802. In this context, that silence is fatal to the Wisconsin

court’s analysis. In the MCCA, Congress included a provi-

sion declaring that, “/eJacept as [Section 1396r-5] specifi-

cally provides,” the MCCA “does not apply to” a “determi-

nation of what constitutes income or resources” or “the

methodology and standards for determining and evaluating

income and resources.” 42 U.S.C. 1396r-5(a)(3) (emphasis

added). Section 1396r-5 nowhere “provides” that income

from the institutionalized spouse may not “constitute[] in-

come” of the community spouse when deciding whether to

raise the CSRA, and it certainly does not do so “specifically.”

2. The Wisconsin Court of Appeals also relied on the fact

that the adjustment to the CSRA is a pre-eligibility deter-

mination. Pet. App. 12a-13a. For post-eligibility determina-

tions, the court observed, the MCCA provides specific rules.

Under one such rule, if “the amount of monthly income

otherwise available to the community spouse” is less than

the MMMNA—and if the institutionalized spouse makes the

difference available to the community spouse—that amount

(the “community spouse monthly income allowance”) “shall

be deducted from the [institutionalized] spouse’s monthly

income” in determining the extent of assistance furnished to

the institutionalized spouse. 42 U.S.C. 1396r-5(d)(1)(B) and

(2). The court read those provisions as “direct{ing] the

institutionalized spouse to transfer income to the community

spouse if the community spouse’s income falls short of the

MMMNA.” Pet. App. 12a. Noting that Congress did not

specifically provide for such a transfer in the case of initial

eligibility determinations, the court inferred that such attri-

bution is prohibited in that setting. It reasoned: “Because

§ 1396r-5(d) (relating to transferring income) is limited to

post-eligibility determination transfers, * * * then increas-

ing the CSRA via resources is the only method by which a

community spouse can be afforded more income for the

MMMNA at the time [Medicaid] eligibility is being deter-

mined for the institutionalized spouse.” Jd. at 13a.

The court of appeals proceeded from an erroneous prem-

ise. Subsection (d)(1)(B) does not itself direct the institu-

tionalized spouse to transfer income to the community

spouse, and it does not address the question of whether a

State may require the institutionalized spouse to do so.

Rather, it provides that, if the community spouse’s income is

less than the MMMNA, and if the difference (the community

spouse income allowance) is transferred to the community

spouse, then that amount is deducted from the institutional-

ized spouse’s income for purposes of determining the extent

of assistance the institutionalized spouse will receive. That

provision in no way demonstrates that Congress intended to

bar a State from treating a portion of the institutionalized

spouse’s income as available to the community spouse for

purposes of determining whether the community spouse’s

income meets or exceeds the MMMNA. To the contrary, the

very fact that Congress fashioned special rules accommodat-

ing the transfer of such income to the community spouse

when the transfer actually occurs post-eligibility strongly

reinforces the conclusion that a State may regard such

income as available to the community spouse in determining,

at the initial eligibility stage, whether the income available

to the community spouse falls short of the MMMNA (and,

accordingly, whether an increase in the CSRA is called for).

Indeed, while the Wisconsin Court of Appeals posited (Pet.

App. lla) that Congress demonstrated an intent to prohibit

imputing the institutionalized spouse’s income to the com-

munity spouse when deciding whether to raise the CSRA by

failing to include “direct or specific language” stating that

such “imputation * * * should occur,” the legislative history

shows the opposite to be true. As pointed out above (p. 18,

supra), the Conference Report expressly contemplates that

there might be “other income attributable to the community

spouse” that can be considered when determining whether

to increase the CSRA.

The court of appeals’ reasoning also proves too much, be-

cause Congress did not make any of the extensive income-

attribution rules—except the prohibition on attributing com-

munity spouse income to the institutionalized spouse, 42

U.S.C. 1396r-5(b)(1)—applicable to initial eligibility deter-

minations. See 42 U.S.C. 1396r-5(b)(2) (providing rules for

¶aſttribution of income” for “purposes of the post-eligibility

income determination”); H.R. Conf. Rep. No. 661, at 262 (in-

come-attribution requirements in Subsection (b)(2) “applly]

only to post-eligibility treatment”). For example, “[{iJn de-

termining the income of an institutionalized or community

spouse for purposes of the post-eligibility income determina-

tion,” t!.e MCCA provides that non-trust income “shall be

considered only available to” the spouse in whose name the

“payment of income is made.” 42 U.S.C. 1396r-5(b)(2). Thus,

under the court of appeals’ analysis, the fact that Congress

omitted any requirement that States follow that name-on-

the-check rule in initial eligibility determinations would pre-

clude States and the Secretary from following that rule in

determining eligibility. Similarly, Congress’s provision of

mandatory rules for allocating payments made in the names

of both spouses or in the name of either spouse and a third

party for post-eligibility decisions, 42 U.S.C. 1396r-5(b)(2)(A)

(ii) and (iii), and its failure to require use of those rules in

making initial eligibility determinations, would preclude

States from employing those rules in determining eligibility.

That result would frustrate, not further, Congress’s intent.

3. Ultimately, a comparison between the extensive rules

that Congress established for attributing income post-eligi-

bility, see 42 U.S.C. 1396r-5(b)(2)(A)-(D) and (d)(1)-(5), and

the singular prohibition (against attributing community

spouse income to the institutionalized spouse) that applies in

making initial eligibility determinations, 42 U.S.C. 1396r-

5(b)(1), proves just one thing—that Congress did not defini-

tively resolve most of the complex issues concerning income

attribution in the context of initial eligibility determinations.

The statute thus presents a textbook example of a legislative

“gap.” Cf. Chevron, 467 U.S. at 843. Consistent with the

principles of cooperative federalism that undergird the Medi-

caid program, Congress in 42 U.S.C. 1396a(a)(17) expressed

its expectation that the States would establish “reasonable

standards * * * for determining eligibility for and the

extent of medical assistance.” Cf. Wilder v. Virginia Hosp.

Ass'n, 496 U.S. 498, 506 (1990) (Medicaid provision requiring

States to reimburse hospitals for “reasonable costs” is

designed to afford “States some degree of flexibility to adopt

their own methods”); Lukhard v. Reed, supra (upholding

Secretary's policy of permitting but not compelling States to

treat personal injury awards as income“).

Moreover, in Section 1396a(a)(17)(B), Congress expressed

its expectation that it would be the Secretary who would

establish the boundaries of reasonableness. State plans, that

Section declares, must “provide for taking into account only

such income and resources as are, as determined in accor-

dance with standards prescribed by the Secretary, available

to the applicant or recipient.” 42 U.S.C. 1396a(a)(17)(B) (em-

phasis added). This Court has recognized that Congress, by

using such language, “expressly delegated to the Secretary

the power to prescribe standards.” Batterton v. Francis, 432

U.S. 416, 425 (1977). “In a situation of this kind, Congress

entrusts * * * the primary responsibility for” providing

content to the statute “to the Secretary, rather than to the

courts.” Ibid. See also id. at 421-422, 429-432 (because the

statute permits the Secretary to “prescribe standards,” the

Secretary may adopt a rule that permits States to choose

In this case, the Wisconsin court ignored Section

1396a(a)(17)’s express vesting of authority in the States and

the Secretary. Confronted with the MCCA’s failure to pro-

vide extensive rules regarding income attribution between

spouses in making initial eligibility determinations, and the

absence of a definition of “community spouse’s income” for

purposes of 42 U.S.C. 1396r-5(e)(2)(C), the court of appeals

essentially invented its own. Thus, in announcing a

resources-first requirement, the court of appeals borrowed

the name-on-the-check rule from the post-eligibility context,

so that any income in the community spouse’s name is

deemed to be the community spouse’s alone, and income in

the institutionalized spouse’s name is deemed to be the

institutionalized spouse’s alone. 42 U.S.C. 1396r-5(b)(2). At

the same time, the court refused to attach any significance to

the exception to that rule contained in Section 1396r-5(a),

also applicable post-eligibility, under which income of the

the community spouse if the income “otherwise available to”

the community spouse is less than the MMMNA. See 42

U.S.C. 1396r-5(d)(1)(B) and (2). Such a pick-and-choose

approach, given the statute’s complexity, may well yield a

permissible means of implementing the MCCA. But it is

hardly compelled by the statutory text. Rather, one would

ordinarily think that, if a State may look to the post-

eligibility name-on-the-check rule for guidance in making

initial eligibility determinations, it may also consider the

retary’s view. As the Secretary explained in 1993, “(since

the institutionalized spouse must transfer the income

allowance to the community spouse to have it deducted in

the post-eligibility calculation, the State should include this

income as available to the community spouse when it counts

that spouse’s own income.” See Pet. App. 83a.

The Wisconsin Court of Appeals offered two reasons for

declining to accord the Secretary’s views any weight. First,

the court concluded that deference is inappropriate because

the MCCA unambiguously forecloses the income-first ap-

proach. Pet. App. 16a. As we have explained above, that

conclusion is demonstrably incorrect. Second, the court be-

lieved that HHS “has not interpreted the statute consis-

tently.” Pet. App. 16a. Not so: HHS without exception has

taken the position that the income-first rule is a permissible

methodology. See pp. 18-21, supra. Indeed, HHS announced

its view in the State Medicaid Manual days after the MCCA

became effective. See pp. 19-20 & note 5, supra. That guid-

consin court pointed to no HHS document or pronouncement

. ' To the extent the agency has vacillated, it has been on whether

the alternative approach the state court imposed here

is similarly permissible. The agency policy statement issued in November

under (42 U.S.C. "1896r-5(4)(1XB)) before being allowed to raise the

[CSRA).” Pet. App. 8la. Later, on March 3, 1994, HCPA issued a memo.

randum stating that the November 1993 m n should not be read

as requiring the income method. Id at 85a, 88a. Rather, the agency

left the States “the option to use the ‘income first’ rule or to apply some

other reasonable” met “until we have issued final regulations

which specifically address this issue.” Id. at 86a. Thus, HHS has never

departed from its view that Section 1396r-5 permits States to use an

ineome-first method. Rather, the agency has merely indicated that, in

view of the ambiguity in the statute, the federal government would pay

the resulting federal share of Medicaid benefits to States using either the

income-first or resources-first method because each constitutes a “rea-

sonable” standard for determining eligibility. See 66 Fed. Reg. at 46,766

(App., infra, 32a).

4. Finally, the Wisconsin court’s judgment rested on a

policy concern that the income-first method might leave

MMMNA ‘if the institutionalized spouse dies before the

community spouse does. Pet. App. 14a-15a.

As an initial matter, that analysis rests on a dubious fac-

tual assumption—that, as a general rule, when the institu-

tionalized spouse dies, her income stream essentially disap-

pears, rather than being transferred in large part to her

spouse as a devisee or heir of her estate or as the recipient of

survivor's benefits under statutory or private pension ar-

rangements. In most benefits and pension contexts, a sur-

viving spouse is entitled to receive, on his spouse’s death, a

substantial share of the benefits that were payable to the

deceased spouse (or to the two spouses jointly) during her

lifetime. For example, the Employee Retirement Income

Security Act “requires that every qualified joint and survi-

vor annuity include an annuity payable to a nonparticipant

surviving spouse,” and that the survivor’s annuity be not

“less than 50% of the amount of the annuity which is payable

during the joint lives of the participant and spouse; * * * The

statutory object * * * is to ensure a stream of income to

surviving spouses.” Boggs v. Boggs, 520 U.S. 833, 842-843

(1997) (citing 29 U.S.C. 1055(a) and (d)(1)). And the Social

Security Act also makes provision for payment of increased

old-age benefits to surviving spouses. 42 U.S.C. 402(b)(2)

and (c)(3); 42 U.S.C. 40 % A) and (FH. See also J.

Thomas Oldham, Should the Surviving Spouse’s Forced

Share Be Retained?, 38 Case W. Res. L. Rev. 223, 242 (1988)

(Federal law provides that surviving spouses normally in-

herit’ certain important benefits from the decedent * * *.

For example, a surviving non-employee spouse normally

inherits the right to receive the monthly Social Security

benefits that were paid to the decedent. In addition, the

survivor normally will receive a survivor’s annuity from the

employee’s pension plan.”) (footnote omitted).

Consequently, the institutionalized spouse’s death does

not necessarily or even ordinarily cause her income stream

to become altogether unavailable to the community spouse.

In fact, the institutionalized spouse’s death often will in-

crease the income available to the community spouse. Be-

fore the institutionalized spouse’s death, much of her income

must be dedicated to the substantial costs of her institutional

and medical care; after her death, those costs disappear, and

any Social Security, pension or other income becomes

directly payable to the community spouse.

The court of appeals was also incorrect to treat the

MMMNA as the minimum amount the community spouse

is set at 150% of the poverty threshold for a couple, plus a

shelter allowance where necessary. 42 U.S.C. 1396r-5(d)(3)

and (4). It thus ensures that, while the institutionalized

spouse is alive, the community spouse can maintain a domi-

cile and lifestyle suitable to a couple. That provision affords

important protection where the institutionalized spouse may

return home at some point. Once the institutionalized

spouse is deceased, however, the MMMNA ceases to be a

In any event, the income-first method ensures that com-

munity spouses are more financially secure than, for

example, spouses whose partners are never institutionalized.

If a couple lives together continuously, the spouses may need

to exhaust almost all of their resources before either of them

can qualify for Medicaid; for the surviving spouse in such a

relationship, no CSRA or MMMNA protected resources or

income for his support. Yet the surviving spouse who lives

with his Medicaid-eligible partner during their married life

suffers no lesser loss of income upon her death than would

the surviving spouse of an institutionalized partne1

Finally, the Wisconsin court’s analysis wholly ignores

competing policy considerations. As this Court has ex-

that provides meaningful benefits in equal measure to every-

one. Both federal and state funds available for such assis-

tance are limited.” Hogan, 457 U.S. at 590. As a result,

Medicaid is generally reserved for the Nation’s most needy.

Ibid. The MCCA creates a generous exception to that rule,

and to the general rule that spouses are expected to support

each other. Under the MCCA, if one spouse is institu-

tionalized, the couple need not exhaust its resources; some

resources are protected through the CSRA. By requiring

further increases in the CSRA for the benefit of community

spouses, even though most other applicants (including other

couples) may have much more limited resource allowances,

the court of appeals’ approach necessarily decreases the

funding available for potentially more needy persons in

order to make additional dollars available to relatively less

needy community spouses. Any policy rationale that may be

thought to support such a result must be weighed against

that competing concern.

Accordingly, while the resources-first approach consti-

tutes a “reasonable” and permi

— | is by 3 no means — by the relevant —

considerations, much less by the text of the MCCA. The

income-first approach also is a reasonable and permissible

method of implementing the Act, as demonstrated by the

structure of the Act as a whole, the legislative history of the

MCCA, and the Secretary’s longstanding and consistent

interpretation.

CONCLUSION

The judgment of the Wisconsin Court of Appeals should

be reversed.

Respectfully submitted.

ALEX AZAR II

General Counsel

SHEREE R. KANNER

Chief Counsel

Centers forMedicare &

Medicaid Services

HENRY R. GOLDBERG

Deputy Chief Counsel

Centers for Medicare &

Medicaid Services

SEPTEMBER 2001

THEODORE B. OLSON

Solicitor General

ap 4 E. SCHIFFER

ing Assistant Attorney

General

EDWIN S. KNEEDLER

JEFFREY A. LAMKEN

Assistant to the Solicitor

General

WILLIAM KANTER

BRUCE G. FORREST

Attorneys

APPENDIX A

1. Section 1902(a) of the Social Security Act, 42 U.S.C.

1396a(a) (1994 & Supp. V 1999), provides in pertinent part:

§ 1396a. State plans for medical assistance

(a) Contents

A State plan for medical assistance must—

(1) provide that it shall be in effect in all political

subdivisions of the State, and, if administered by them,

be mandatory upon them;

(2) provide for financial participation by the State

equal to not less than 40 per centum of the non-Federal

share of the expenditures under the plan with respect to

which payments under section 1396b of this title are

authorized by this subchapter; and, effective July 1, 1969,

provide for financial participation by the State equal to

all of such non-Federal share or provide for distribution

of funds from Federal or State sources, for carrying out

the State plan, on an equalization or other basis which

will assure that the lack of adequate funds from local

sources will not result in lowering the amount, duration,

scope, or quality of care and services available under the

plan;

(3) provide for granting an opportunity for a fair

hearing before the State agency to any individual whose

claim for medical assistance under the plan is denied or is

not acted upon with reasonable promptness;

* * * * *

(la)

2a 3a

(10) provide— (VI) who are described in subparagraph (C) of

(A) for making medical assistance available, in- subsection ()(1) of this section and whose family

cluding at least the care and services listed in para- income does not exceed the income level the State

graphs (1) through (5), (17) and (21) of section 1396d(a) is required to establish under subsection (/)(2)(B)

of this title, to— - Of this section for such a family, or

(i) all individuals—

(I) who are receiving aid or assistance under

any plan of the State approved under subchapter

I, X, XIV, or XVI of this chapter, or part A or part

E of subchapter IV of this chapter (including in-

dividuals eligible under this subchapter by reason

of section 602(a)(37), 606(h), or 673(b) of this title,

or considered by the State to be receiving such aid

as authorized under section 682(e)(6) of this title),

(II) with respect to whom supplemental secur-

ity income benefits are being paid under sub-

chapter XVI of this chapter (or were being paid as

of August 22, 1996) and would continue to be paid

but for the enactment of that section or who are

qualified severely impaired individuals (as defined

in section 1396d(q) of this title),

(III) who are qualified pregnant women or

children as defined in section 1396d(n) of this title,

(IV) who are described in subparagraph (A)

or (B) of subsection (HI) of this section and whose

family income does not exceed the minimum in-

come level the State is required to establish under

subsection (l)(2)(A) of this section for such a

family;

(V) who are qualified family members as de-

fined in section 1396d(m)(1) of this title,

(VII) who are described in subparagraph (D)

of subsection (() of this section and whose family

income does not exceed the income level the State

is required to establish under subsection (/)(2)(C)

of this section for such a family;

(ii) at the option of the State, to any group or

groups of individuals described in section 1396d(a) of

this title (or, in the case of individuals described in

section 1396d(a)(i) of this title, to any reasonable

categories of such individuals) who are not individuals

described in clause (i) of this subparagraph but—

(I) who meet the income and resources re-

quirements of the appropriate State plan de-

scribed in clause (i) or the supplemental security

income program (as the case may be),

(II) who would meet the income and re-

sources requirements of the appropriate State

plan described in clause (i) if their work-related

child care costs were paid from their earnings

rather than by a State agency as a service ex-

penditure,

(III) who would be eligible to receive aid

under the appropriate State plan described in

clause (i) if coverage under such plan was as broad

as allowed under Federal law,

(IV) with respect to whom there is being paid,

or who are eligible, or would be eligible if they

were not in a medical institution, to have paid with

respect to them, aid or assistance under the

appropriate State plan described in clause (i),

supplemental security income benefits under sub-

chapter XVI of this chapter, or a State supple-

mentary payment;

(V) who are in a medical institution for a

period of not less than 30 consecutive days (with

eligibility by reason of this subclause beginning on

the first day of such period), who meet the re-

source requirements of the appropriate State plan

described in clause (i) or the supplemental security

income program, and whose income does not

exceed a separate income standard established by

the State which is consistent with the limit estab-

lished under section 1396b(f)(4)(C) of this title,

(VI) who would be eligible under the State

plan under this subchapter if they were in a

medical institution, with respect to whom there

has been a determination that but for the pro-

vision of home or community-based services de-

scribed in subsection (c), (d), or (e) of section 1396n

of this title they would require the level of care

provided in a hospital, nursing facility or in-

termediate care facility for the mentally retarded

the cost of which could be reimbursed under

the State plan, and who will receive home or

community-based services pursuant to a waiver

granted by the Secretary under subsection (c), (d),

or (e) of section 1396n of this title,

(VII) who would be eligible under the State

plan under this subchapter if they were in a

medical institution, who are terminally ill, and who

will receive hospice care pursuant to a voluntary

election described in section 1396d(o) of this title;

(VIII) who is a child described in section

1396d(a)(i) of this title

(aa) for whom there is in effect an adoption

assistance agreement (other than an agreement

under part E of subchapter IV of this chapter)

between the State and an adoptive parent or

parents,

(bb) who the State agency responsible for

adoption assistance has determined cannot be

placed with adoptive parents without medical

assistance because such child has special needs

for medical or rehabilitative care, and

(cc) who was eligible for medical] assistance

under the State plan prior to the adoption

assistance agreement being entered into, or

who would have been eligible for medical assis-

tance at such time if the eligibility standards

and methodologies of the State’s foster care

program under part E of subchapter IV of this

chapter were applied rather than the eligibility

standards and methodologies of the State’s aid

to families with dependent children program

under part A of subchapter IV of this chapter;

(IX) who are described in subsection (1)(1) of

this section and are not described in clause (i)(IV),

clause (i)(VI), or clause (i“ VII);

(X) who are described in subsection (m) (I) of

this section;

(XI) who receive only an optional State

supplementary payment based on need and paid

on a regular basis, equal to the difference between

the individual’s countable income and the income

standard used to determine eligibility for such

supplementary payment (with countable income

being the income remaining after deductions as

established by the State pursuant to standards

that may be more restrictive than the standards

for supplementary security income benefits under

subchapter XVI of this chapter), which are avail-

able to all individuals in the State (but which may

be based on different income standards by political

subdivision according to cost of living differences),

and which are paid by a State that does not have

an agreement with the Commissioner of Social

Security under section 1382e or 1383c of this title;

(XII) who are described in subsection (z)(1) of

this section (relating to certain TB-infected in-

dividuals);

(XIII) who are in families whose income is less

than 250 percent of the income official poverty line

(as defined by the Office of Management and Bud-

get, and revised annually in accordance with

section 9902(2) of this title) applicable to a family

of the size involved, and who but for earnings in

excess of the limit established under section

1396d(q)(2)(B) of this title, would be considered to

be receiving supplemental security income (sub-

ject, notwithstanding section 13960 of this title, to

payment of premiums or other cost-sharing charges

(set on a sliding scale based on income) that the

State may determine);

(XIV) who are optional targeted low-income

children described in section 1396d(u)(2)(B) of this

title;

(XV) who, but for earnings in excess of the

limit established under section 1s06d(qX2XB) of

— security income, who is at least 16, but

less than 65, years of age, and whose assets, re-

sources, and earned or unearned income (or both)

do not exceed such limitations (if any) as the State

(XVI) who are employed individuals with a

medically improved disability described in section

1396d(v) (1) of this title and whose assets, re-

sources, and earned or unearned income (or both)

do not exceed such limitations (if any) as the State

may establish, but only if the State provides

medica] assistance to individuals described in sub-

clause (XV);

(XVII) who are in dent foster care ado-

lescents (as defined in section 13. 5d(w)(1) of this

title), or who are within any reasonable categories

of such adolescents specified by the State; or

| (XVII) who : are described in subsection (aa)

(17) except as provided in subsections (/)(3), (ms),

and (m)(4) of this section, include reasonable standards

(which shall be comparable for all groups and may, i-

accordance with standards prescribed by the Secretary,

differ with respect to income levels, but only in the case

of applicants or recipients of assistance under the plan

the State approved under subchapter I, X, XIV, or XVI,

or part A of subchapter IV of this chapter, and with

respect to whom supplemental! security income benefits

are not being paid under subchapter XVI of this chapter,

based on the variations between shelter costs in urban

areas and in rural areas) for determining eligibility for

and the extent of medical assistance under the plan

which (A) are consistent with the objectives of this

subchapter, (B) 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 or recipient and (in the case of

lieant or recipient who would, except for income

and resources, be eligible for aid or assistance in the form

of money payments under any plan of the State approved

under subchapter I, X, XIV, or XVI, or part A of sub-

chapter IV, or to have paid with respect to him supple-

mental security income benefits under subcha

of this chapter) as would not be disregarded (or set aside

for future needs) in dete:

aid, assistance, or benefits, ‘(© puovide for seasensble

evaluation of any such income or resources, and (D) do

not take into account the financial responsibility of any

individual for any applicant or recipient of assistance

under the plan unless such applicant or recipient is such

individual’s spouse or such individual's child who is under

age 21 or (with respect to States eligible to participa

the State program establis behapter XVI of

this ¢ Vin bind or pormonentiy and totally de

abled, or is or disabled as defined in section 1382c of

this title (with respect to States which are not eligible to

participate in such program); and provide for flexibility

in the application of such standards with respect to

income by taking into account, except to the extent

prescribed by the Seer tary, the costs (whether in the

form of insurance premiums, payments made to the State

under section 1396b(f)(2)(B) of this title, or otherwise and

regardless of whether such costs are reimbursed under

another public program of the State or political sub-

division thereof) incurred for medical care or for any

other type of remedial care recognized under State law,

* * * + *

10a

2. Section 1924 of the Social Security Act, 42 U.S.C.

1396r-5 (1994 & Supp. V 1999), provides in pertinent part:

§1396r-5. Treatment of income and resources for

certain institutionalized spouses

(1) Supersedes other pr:

In determining the eligibility for medical assistance of

an institutionalized spouse (as defined in subsection

(h) 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)

(2) No comparable treatment required

Any different treatment provided under this section

for institutionalized spouses shal] not, by reason of

paragraph (10) or (17) of section 1396a(a) of this title,

(3) Does not affect certain determinations

does not apply to—

(A) the determination of what constitutes income or

resources, or

(4) Application in certain States and territories

(A) Application in States operating under de-

In the case of any State which is providing medical

assistance to its residents under a waiver granted

lla

under section 1315 of this title, the Secretary shall

require the State to meet the requirements of this

section in the same manner as the State would be

required to meet such requirement if the State had in

effect a plan approved under this subchapter.

tories

This section shall only apply to a State that is one

This section applies to individuals receiving insti-

onstration waiver program (as defined in section 1396u-

4(a)7) of this title) or under a PACE program under sec-

tion 1936u-4 or 1395eee of this title.

(b) Rules for treatment of income

(1) Separate treatment of income

During any month in which an institutionalized spouse

is in the institution, except as provided in paragraph (2),

no income of the community spouse shal] be deemed

available to the institutionalized spouse.

(2) Attribution of income

In determining the income of an institutionalized

spouse or community spouse for purposes of the post-

eligibility income determination described in subsection

(d) of this section, except as otherwise provided in this

section and regardless of any State laws relating to

community property or the division of marital property,

12a

(A) Non-trust property

Subject to subparagraphs (C) and (D), in the case

of income not from a trust, unless the instrument

providing the income otherwise specifically pro-

vides—

(i) it payment of income is made solely in

the name of the institutionalized spouse or the

community spouse, the income shal] be con-

sidered available only to that respective

spouse;

(ii) if payment of income is made in the

names of the institutionalized spouse and the

community spouse, one-half of the income shall

be considered available to each of them; and

(iii) if payment of income is made in the

names of the institutionalized spouse or the

community spouse, or both, and to another

person or persons, the income shall be con-

sidered available to each spouse in prop 8

— ͤ——— tameaininmeds

with respect to both spouses and no such in-

terest is specified, — — interest

— ——

In the case of a trust

13a

(u) income shall be considered available

to each spouse as provided in the trust, or, in

the absence of a specific provision in the

trust—

(1) if payment of income is made

solely to the institutionalized spouse or the

community spouse, the income shall be con-

sidered available only to that respective

spouse;

(II) if payment of income is made to

both the institutionalized spouse and the

community spouse, one-half of the income

shal] be considered available to each of

them; and

(III) if payment of income is made to

the institutionalized spouse or the com-

munity spouse, or both, and to another per-

son or persons, the income shall be con-

sidered available to each spouse in propor-

tion to the spouse’s interest (or, if payment

is made with respect to both spouses and

no such interest is specified, one-half of the

joint interest shal] be considered available

to each spouse).

(i) except as provided in clause (ii), in-

come shall be attributed in accordance with the

provisions of this subchapter (including sec-

—1 18964) (17) and 1396p(d) of this title),

In the case of income not from a trust in which

there is no instrument establishing ownership, sub-

ject to subparagraph (D), one-half of the income shall

. —

l4a

(D) Rebutting ownership

The rules of subparagraphs (A) and (C) are

superseded to the extent that an institutionalized

spouse can establish, by a preponderance of the

evidence, that the ownership interests in income are

other than as provided under such subparagraphs.

(1) Computation of spousal share at time of

institutionalization

(A) Total joint resources

There shall be computed (as of the beginning of

the first continuous period of institutionalization

(beginning on or after September 30, 1989) of the

institutionalized spouse )}—

(i) the total value of the resources to the

extent either the institutionalized spouse or

the community spouse has an ownership in-

terest, and

(ii) a spousal share which is equal to 1/2

(B) Assessment

At the request of an institutionalized spouse or

community spouse, at the beginning of the first

continuous period of institutionalization (beginning

on or after September 30, 1989) of the institution-

alized spouse and upon the receipt of relevant

documentation of resources, the State shal] promptly

assess and document the total value described in

subparagraph (A)i) and shall provide a copy of such

assessment and documentation to each spouse and

15a

shall retain a copy of the assessment for use under

this section. If the request is not part of an appli-

cation for medical assistance under this subchapter,

the State may, at its option as a condition of pro-

viding the assessment, require payment of a fee not

exceeding the reasonable expenses of providing and

documenting the assessment. At the time of pro-

viding the copy of the assessment, the State shall

include a notice indicating that the spouse will have a

right to a fair hearing under subsection ‘e)(2) of this

(2) Attribution of resources at time of initial

eligibility determination

In determining the resources of an institutionalized

spouse at the time of application for benefits under this

subchapter, regardless of any State laws relating to

community property or the division of marital

property—

(A) except as provided in subparagraph (B), all the

resources held by either the institutionalized spouse,

community spouse, or both, shall be considered to be

available to the institutionalized spouse, and

(B) resources shall be considered to be available to

an institutionalized spouse, but only to the extent

that the amount of such resources exceeds the

amount computed under subsection (f)(2)(A) of this

section (as of the time of application for benefits).

16a

(3) Assignment of support rights

The institutionalized spouse shall not be ineligible by

reason of resources determined under paragraph (2) to

be available for the cost of care where

(A) -the institutionalized spouse has assigned to the

State any rights to support from the community

spouse;

(B) the institutionalized spouse lacks the ability to

execute an assignment due to physical or mental

impairment but the State has the right to bring a

support proceeding against a community spouse

without such assignment; or

would work an undue hardship.

(4) Separate treatment of resources after eligi-

During the continuous period in which an insti-

tutionalized spouse is in an institution and after the

month in which an institutionalized spouse is determined

to be eligible for benefits under this subchapter, no

resources of the community spouse shall be deemed

available to the institutionalized spouse.

(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.

17a

(d) Protecting income for community spouse

(1) Allowances to be offset from income of

institutionalized spouse

After an institutionalized spouse is determined or

redetermined 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 tot extent

income of the institutionalized spouse is made

avai'able to (or for the benefit of) the community

spouse.

equal to at least 1/3 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.

18a

(2) Community spouse monthly income al-

lowance 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) of this

section, 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 with-

out regard to such an allowance).

(3) Establishment of minimum monthly main-

tenance 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 Manage-

ment and Budget and revised annually in accor-

dance with section 9902(2) of this title) for a

(ii) an excess shelter allowance (as defined

in paragraph (4)).

A revision of the official poverty line referred to in

19a

(B) Applicable percent

For purposes of subparagraph (A)(i), the “appli-

cable percent” described in this paragraph, effective as

(i) September 30, 1989, is 122 percent,

(ii) July 1, 1991, is 133 percent, and

(iii) July 1, 1992, is 150 percent.

needs allowance

The minimum monthly maintenance needs allow-

ance established under subparagraph (A) may not

exceed $1,500 (subject to adjustment under subsections

(e) and (g) of this section).

(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, 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

(3X Ai), except that, in the case of a condominium or co-

clause (i) shall apply to medical assistance furnished

after the date of publication of the revision.

operative, for which a maintenance charge is included

under subparagraph (A), any allowance under sub-

20a

paragraph (B) shall be reduced to the extent the mainte-

nance charge includes utility expenses.

(5) Court ordered support

If a court has entered an order against an institu-

tionalized 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.

(e) Notice and fair hearing

(1) Notice

Upon—

(A) a determination of eligibility for medical

assistance of an institutionalized spouse, or

(B) a request by either the institutionalized spouse,

or the community spouse, or a representative acting

on behalf of either spouse,

each State shall notify both spouses (in the case

described in subparagraph (A)) or the spouse making

the request (in the case described in subparagraph

(B)) of the amount of the community spouse monthly

income allowance (described in subsection (d)(1)(B) of

this section), of the amount of any family allowances

(described in subsection (d)(1)(C) of this section), of

the method for computing the amount of the com-

munity spouse resources allowance permitted under

subsection (f) of this section, and of the spouse’s right

to a fair hearing under this subsection respecting

ownership or availability of income or resources, and

the determination of the community spouse monthly

income or resource allowance.

— (d 2B) of this sec-

“ —

2 —

cu the — sae 4 the — share

(iv) the attribution of resources under sub-

section (e ) of this section; or

(v) the determination of the community

en no a it

nati of the community spouse resource

(B) Revision of minimum monthly maintenance

needs allowance

munity spouse needs income, above the level other-

needs allowance in subsection (4)e2XA) ) of t this

additional income as is necessary.

allowance 123238

If either such spouse establishes that the com-

mount of income generated by such an allowanee) is

inadequate to raise the community spouse’s income to

— naan

resource allowance under subsection (f)(2) of this cee.

, mahzec may, ™

section 1386p) of this tite, translr an amount equa

in paragraph (2)), but only to the extent the resources of

the i Spouse are transferred to (or for the

sole benefit of) the community spouse. The

under the preceding sentence shal] be made as soon as

(2) — eR PORN I

clause (ii1I)) an amount specified —

State plan.

(u) the lesser of (I) the spousal share

computed under subsection (eV) of this sec-

tion, or (II) $60,000 (subject to adjustm

under subsection (g) of this section),

section (e 2) of this section; or

(iv) the amount transferred under a court

order under paragraph (3),

exceeds

(3) Transfers under court orders

spouse, section 1806p of thin title chad sane

amounts of resources transferred pursuant to such order

24a

or services furnished during a calendar year after 1969,

— and DKG of this section shall ~

— — —

1396a(aX10X AXiiX et this title, and

— — ——

APPENDIX B

42 CFR Part 431

{CMS-2128-P]

Medicaid Program; Continue to Allow States an Option

When Aajsting ne Protected ne Allowance

specify how income and resources of spouses separated by

— — — tenines Or

— daRRN

Roy Trudel, (410) 786-3417.

— — — —

public comments, phone (410) 786-0626 or (410) 786-7195.

L Background

A. Statutory Basis

Tithe XIX of t the Socia ä Ast Gas Act) 1

bares castain ensts of medical treatment for neody persons.”

Harris v. McRae, 448 U.S. 297, 301 (1980). Under section

1902(a\17) of the Act, each participating State must develop

a plan containing “reasonable standards 222 for deter-

Schweiker v. Gray Pant. . 453 U.S. 34, 36 (1981). Section

— — Gas Case Chto cients

— — —

or recipient.”

Section 1924 of the Act requires a State with a Medicaid

— eat — eae

eee ee

level and with minimal resources as well ‘At that time, after

cud redete fru by the sponse te comma

and the institutionalize< ceding sot

. ——— —

ized spouse to be available for the care of the institutional-

ized spouse. — hy Kang —

— ahabtaits teremaneahen thetelinttons

28a

those requirements in some cases was the “pauperization” of

the community spouse. H.R. Rep. No. 105, 100th Cong., Ist

Sess. Pt. 2, at 65 (1987).

The Congress attempted to alleviate that spousal impov-

erishment hardship in the Medicare Catastrophic Coverage

Act (MCCA) of 1988, (Public Law 100-360, enacted on

December 22, 1988.) The MCCA requires a State to use a

complex set of requirements and exclusions when allocating

income and resources between community and institutional-

ized spouses, both when the State makes the initial eligibility

determination, and later in post-eligibility determinations.

In section 1924(a)(1) of the Act, it provides that the

spousal impoverishment provisions “supersede any other

provision” of the Medicaid statute that “is inconsistent with

them.” However, the MCCA did not repeal the Secretary’s

anthority to prescribe standards (under section 1902(a)(17)

(B) of the Act) for determining what income is “available” to

a spouse, and the requirement for States to set reasonable

standards for determining eligibility and amount of assis-

tance. That section 1902(a)(17) authority may now only be

exercised in a manner that does not contravene the specific

requirements of the spousal impoverishment provisions.

With respect to the allocation of income as part of an

eligibility determination, the spousal impoverishment pro-

visions impose only a single rule. Section 1924(b)(1) of the

Act provides that during any month in which an insti-

tutionalized spouse is in the institution, no income of the

community spouse shall be deemed available to the insti-

tutionalized spouse (subject to certain qualifications regard-

ing income attribution). Thus, section 1924(b)(1) of the Act

establishes a special rule that protects the income of the

community spouse by excluding that income from considera-

tion when determining whether the institutionalized spouse

is eligible for Medicaid. Section 1924(b)(1) of the Act, how-

ever, does not address the extent to which the State may

29a

consider the institutionalized spouse’s income available to

meet the needs of the community spouse.

With respect to income attribution after the State makes

the initial eligibility determination, the spousal impoverish-

ment provisions provide more extensive guidance and re-

quirements. Specifically, section 1924(b)(2) of the Act

provides that, if payment of income is made solely in the

name of one spouse, that income is generally treated as

available only to that spouse. Section 1924(d) of the Act

provides a number of exceptions to that rule, which are

generally designed to ensure that the community spouse has

sufficient income to meet his or her basic monthly needs. In

particular, section 1924(d) of the Act provides for the

establishment of a minimum monthly maintenance needs

allowance for each community spouse. The community

spouse’s minimum monthly maintenance needs allowance is

set at a level that is much higher than the official Federal

poverty level. Once income is attributed to each of the

spouses according to the general rules in section 1924(b) of

the Act, the income attributed to the community spouse is

compared to the community spouse’s minimum monthly

maintenance needs allowance. Section 1924(d)(2) of the Act

provides that if the community spouse’s income is less than

the minimum monthly maintenance needs allowance, the

amount of the shortfall can be deducted from the income of

the institutionalized spouse that would otherwise be con-

sidered available for the care of the institutionalized spouse.

The amount of that deduction is referred to as the com-

munity spouse monthly income allowance.

The deduction of the community spouse monthly income

allowance, in effect, prevents income the community spouse

needs to meet basic living expenses from being considered

available for the care of the institutionalized spouse. The

deduction thus causes Medicaid to assume a greater portion

of the costs of institutionalized care. The greater Medicaid

30a

payments for care of the institutionalized spouse would free

up income to meet the minimum needs of the community

spouse. The community spouse monthly income allowance,

therefore, ensures that the community spouse’s basic month-

ly maintenance needs can be met before the institutionalized

spouse’s income is considered available to pay for the costs of

his or her own institutional care.

With respect to the attribution of resources between the

institutionalized spouse and community spouse, the statute

provides extensive rules for both initial and post-eligibility

decisions. For initial eligibility determinations, each

spouse’s share of resources is calculated as of the beginning

of the institutionalized spouse’s first period of institution-

alization. At that time, all of the institutionalized spouse’s

and community spouse’s resources are tallied together, and

one half of the total value is allocated to each spouse (the

“spousal share”). Often, most of the resources allocated to

the institutionalized spouse must be exhausted before the

institutionalized spouse is eligible for Medicaid. In contrast,

the community spouse’s share is protected from complete

exhaustion. In particular, the community spouse’s resources

are not considered available for the care of the institutional-

ized spouse (and the institutionalized spouse can become

Medicaid eligible) so long as the community spouse’s share

does not exceed the community spouse resource allowance

(CSRA). Thus, the CSRA limits the extent to which the

spouses must exhaust resources before the institutionalized

spouse becomes eligible for Medicaid. Section 1924(f)(2)A)

of the Act specifies that the CSRA is the greatest of

(1) $12,000 or a State standard up to $60,000 (indexed for

inflation; for 2001 the indexed amount is $87,000); (2) the

lesser of the spousal share (approximately one-half of the

spouses’ pooled resources) or $60,000 (indexed for inflation);

(3) the amount set at a fair hearing under section 1924(e)(2)

of the Act; or (4) the amount transferred under a court order.

31a

In allocating income and resources between spouses,

States have employed two divergent methods. Under the

method used by mosi States, known as the “income-first”

method, the institutionalized spouse’s income (above the

allowances specified in section 1924(d) of the Act) is allocated

to the community spouse for purposes of determining the

extent to which the community spouse has sufficient income

to meet minimum monthly maintenance needs. Under the

income-first method, the CSRA is increased only if the

community spouse’s income will not reach his or her

minimum monthly maintenance needs allowance after taking

into account any income not protected under section 1924(d)

that is available or potentially available from the institu-

tionalized spouse. In contrast, under the other method,

known as the “resources-first” method, the couple’s re-

sources can be protected for the benefit of the community

spouse to the extent necessary to ensure that the community

spouse’s total income, including income generated by the

CSRA, meets the community spouse’s minimum monthly

maintenance needs allowance. Additional income from the

institutionalized spouse that may be, but has not been, made

available for the community spouse is not considered.

C. Current Policy and Implementation of the New

Provisions

Section 1924(e2C) of the Act provides that if either

spouse establishes that the CSRA (in relation to the amount

ol income generated by that allowance) is inadequate to raise

the community spouse’s income to the minimum monthly

maintenance needs allowance, there shall be substituted an

amount adequate to provide a minimum monthly main-

tenance needs allowance.

We have previously issued policy memoranda and letters

expressing our view that section 1924(e)(2)(C) of the Act

authorizes a State to consider potential income transfers

32a 1

from an institutionalized spouse to a community spouse, so

that a State may adopt the income-first method or apply

some other reasonable methodology until we issue final

regulations addressing the issue. Thus, under our present

policy, States may clearly use the income-first method, and

may be able touse other methods, such as resources-first. In

other words, consistent with the statutory requirement that

State’s utilize “reasonable standards” for determining eligi-

bility and the amount of benefits as described in Section

1902(a)(17), we have permitted States to employ income-first

or other reasonable methodologies. In practice, no State has

elected to use a method other than income-first or resources-

first. The proposed regulation is therefore intended to

codify and reflect longstanding State practices.

However, the issue of which criteria may be employed

during the fair hearing under section 1924(e)(2)(C) of the Act

to determine whether, and if so by how much, to raise the

CSRA has been the subject of some dispute. Permitting the

community spouse to obtain a larger CSRA can give the

community spouse additional income-generating resources to

meet minimum monthly needs. Without an increase in the

CSRA, the resources would be considered available to the

institutionalized spouse and might have to be exhausted be-

fore the institutionalized spouse would be Medicaid eligible.

On the other hand, permitting the hearing officer to raise the

CSRA when the institutionalized spouse has income which

could be used to enable the community spouse to meet mini-

mum monthly maintenance needs can, under some circum-

stances, have unintended consequences for a State’s Medi-

caid program. This policy can create an avenue for a couple

to shelter almost limitless amounts of resources, provided

—— resources currently have minimal incoming - producing

value.

33a

Indeed, the legality of the income first rule has been

challenged in several courts. The United States Courts of

Appeals for the Sixth and Third Circuits have upheld the

income-first rule in Chambers v. Ohio Dep’t of Human

_ Servs., 145 F.3d 793, 802 (6th Cir. 1998) and Cleary v.

Waldman, 167 F.3d 801, 811-812 (3d Cir. 1999), respectively.

Nevertheless, the Wisconsin Court of Appeals invalidated a

Wisconsin statute, which adopted the income-first rule,

holding that the spousal impoverishment provisions of the

Medicaid program unambiguously preclude the use of an

income: first“ methodology. The United States Supreme

Court has granted the State of Wisconsin’s petition for

review of this decision. See Wisconsin Department of

Health and Family Services v. Blumer, No. 00-952.

Because this subject has been a source of some contro-

versy, we believe it is appropriate to codify provisions

regarding the community spouse resource allowance before

adopting regulations governing all of the spousal impoverish-

ment protection provisions of section 1924 of the Act.

II. Provisions of the Proposed Regulations

We propose to allow States the threshold choice of using

either the income-first or resources-first method when

determining whether the community spouse has sufficient

income to meet minimum monthly maintenance needs.

Under our proposal, States would not be able to use different

rules on a case-by-case basis, but must apply the same rule

to all spouses. Under section 1902(a)(17)(B) of the Act, the

Secretary has authority to prescribe appropriate standards

for determining whether income is “available.” In the ex-

ercise of that authority, and in view of the cooperative

federalism considerations embodied in the Medicaid pro-

gram, we have concluded that States may be in the best

position to determine the type of protection to afford com-

munity spouses and whether to require hearing officers to

34a

take into account any income of the institutionalized spouse

We believe that section 1924 of the Act does not specifi-

cally address whether the income-first or resources-first

method is appropriate in making the determination on

raising the CSRA. Section 1924(e)(2)(C) of the Act directs

the State to determine whether the community spouse’s

income meets his or her minimum monthly maintenance

needs. It also provides that, if the community spouse’s

income falls short of meeting those needs, the CSRA should

be increased by an amount that will generate sufficient

income to bring the community spouse’s income to the

minimum monthly maintenance needs level. However, this

statutory guidance does not address whether the community

spouse’s income may include the institutionalized spouse’s

income that could be made available to the community

spouse.

In fact, while section 1924(b)(1) specifically prohibits the

community spouse’s income from being considered available

for the care of the institutionalized spouse, the statute does

not preclude the Secretary nor the State from considering

the institutionalized spouse’s income from being available to

the community spouse for purposes of determining whether

the community spouse’s needs will be met absent an increase

in the CSRA. That supports an inference that it is per-

missible to consider all or some portion of the institutional-

ized spouse’s income to be available to the community

spouse. In addition, the legislative history suggests that

Congress contemplated the possibility that, in determining

whether to raise the CSRA, States might take into account

not only the community spouse’s own income but “other

income attributable to the community spouse” consistent

with the Secretary’s rules. H.R. Cong. Rep. No. 661, 100th

Cong., 2d Sess 265 (1988). Accordingly, we believe that the

22 —— GED ane Coss ans —

resouress-first ruts.

producing resources, — — affords the community

spouse a significant degree of protection fom impoverish-

ment, States may prefer to employ this approach. On the

other hand, the resources first rule may in certain cases

afford greater protection to the — bouse

105 192A(a) of the —— — determin

section 1902(a\17). Section — of the Act pro-

vides that the State plan for medical assistance shall pro-

vide for taking ito account only the — aarp

scribed by the Secretary, available to the pplica at or

Panthe 453 US. 24. 44. 101 8. Ct 2638, 2640 (1981),

— —

lations on the matter of how much income and resources are

— deste wunclihe te tein eae

we can issue a proposed rule on this matter.

_As noted above, section 1924(eXZKC) of the Act authorizes

resoure allowance is inadequate to raise the community

spouse’s income to the minimum monthly maintenance needs

allowance. — tte: Sigmon trian sl

adjustment. r

— 2

nder section IAM JB) of the Act to prescribe stan-

— —— —

spouse’s income that would be available to the community

— —— —— —

— tarry

Sinee our decision, under section 10 7E) of the Act.

to permit States to use either the income-first or resources-

section 190 (17) of the Act to leave the choice of method to

the States. (This approach is consistent with the Supreme

Court’s decision in Batterton v. Francis, 482 U.S. 416 (1977),

— — — States to —

mployed either to melude famihes participating in a

labor strike or to aclude them.) In addition, Section

1902(aX17) contemplates that States will establish plans

— —— Anaten

regulations. Accordingly, as an exercise of our discretion,

we propose to leave to the States the option to either use the

hearing under section 1924(eX2KC) of the Act to determine

whether, and if so by how much, to raise the CSRA.

— —ͤ—U ——

ionalizec 1 tated o 2

— is net in o modied institution or ———

facility or likely to be receiving services under a home and

community-based waiver under section IDN Ai VI)

ee — en ee We propose to

— —ñ4—ͤ— — er 2 agen pect

— ——ũB 2 —

LDA of the Act. — wo would define

“minimum monthly maintenance needs allowance” as the

minimum amount of an institutionalized spouse’s income that

is protected for the community spouse.

9 Geant dieae

erated by the allowance) is not adequate to raise the

tenance needs allowance. At § 431.260(c), we propose to

considered — before additional resources are

allocated to raise the community spouse's income to meet the

— 2 2 —

III. Collection of Information Requirements

Under the Paper Work Reduction Act (PRA) of 1995, we

are required to provide 60-day notice im the —

and 2 ae ae — is ) wooded because 2

— — ———

— — Go — & Ge Pugwens

codifies the existing State practice of cheesing whether to

entirely to each State. We do not currently require States to

— — We will consider all comments

we rective by the date and time specied in the DATES

— —

V. —

— — — nder Act (RPA)

(September 19, 1980, Pub. 1 96-354). Executive Order

sary, to select regulatory —— be

— — comente,

. ‘monthly maintenance needs —

State governments or other entities rule only

ö 1 we Se Se.

rations, and government agencies Most hospitals and most

dus 0 revenues of $25 million or less

dditio section 11020) of Ge Act requires us to

provisions of section 608 of the RFA 1

b 8 — > weeny

a hospital that is located outside of a Metrope

Area and has fewer than 100 beds. — —

—

* ires no new or

4la

governments nor does it preempt State law or otherwis

proponed rae, me domi bev the sate ceri require

either the RFA er section = 180800 ef the > analyses

have determined, and we certify, — ame

In —— with the provisions of Executive Order

42a

List of Sections Affected in 42 C.F.R. Part 431

Grant programs-health, Health facilities, Medicaid, Pri-

vacy, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, the Centers for

Medicare & Medicaid Services propose to amend 42 CFR

part 431 as follows:

PART 431—STATE ORGANIZATION AND GENERAL

ADMINISTRATION

1. The authority citation for part 431 continues to read as

follows:

Authority: Section 1102 of the Social Security Act (42

U.S.C. 1302).

§ 431.200 [Amended]

2. Section 431.200 is amended by adding the sentence,

“This subpart also implements section 1924(e)(2)(C) of the

Act, which provides for a fair hearing regarding revision of

the community spouse resource allowance[,]” at the end of

the section.

3. A new undesignated, centered heading, and new

§ 431.260 are added to read as follows:

§ 431.260 Fair hearings to raise the community spouse

resource allowance.

(a) Definitions. For purposes of this section, the fol-

Community spouse means the spouse of an institutional-

Community spouse resource allowance means the amount

of a couple’s combined jointly and separately-owned re-

43a

sources, as specified in section 1924(f(2)(A) of the Act,

allocated to the community spouse and considered unavail-

able to the institutionalized spouse when determining his or

her eligibility for Medicaid.

Institutionalized spouse means an individual who meets

all of the following criteria:

(1) The individual is in a medical institution or nursing

facility (or at the State’s option, is eligible for home and

community-based waiver services under section 1902(a)

(10 Ai VD) of the Act).

(2) The individual is likely to remain in a medical insti-

tution or nursing facility (or satisfy the State option) for at

least 30 consecutive days.

(3) The individual is married to a person who is not in a

medical institution or nursing facility.

Minimum monthly maintenance needs allowance means

the minimum amount of income, as determined under section

1924(d)(3) of the Act, that is protected for the community

spouse when determining the amount of the institutionalized

spouse’s income that is to be applied to the cost of care.

(b) Request for a hearing. Either spouse (or authorized

representative) may request a hearing to establish that the

community spouse resource allowance (in relation to the

amount of income generated by the allowance) is not

adequate to raise the community spouse’s income to the

(e) Methodology for determining an increase in the com-

munity spouse resource allowance. For purposes of con-

ducting a hearing to determine whether it is appropriate to

raise the community spouse resource allowance (and if so by

how much) a State must elect either of the following

dia

methods, which must apply to all hearings of this type under

the State’s Medicaid program: *

(1) Income first method. The State considers that all

income of the institutionalized spouse that could be made

available to the community spouse, after deducting the

allowances specified in section 1924(d) of the Act, has been

made available before additional resources are allocated to

raise the community spouse’s income to the minimum

monthly maintenance needs allowance.

2) Resources-first method. The State allocates to the

community spouse additional income-producing resources

to raise the community spouse’s income to the minimum

monthly maintenance needs allowance without first con-

sidering all income of the institutionalized spouse that could

be made available to the community spouse as if it has been

made available.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical

Dated: August 28, 2001

Thomas A. Scully,

Administrator, Centers for Medicare

& Medicaid Services

Approved: August 30, 2001

Tommy G. Thompson,

Secretary.

[FR Doc. 01-22605 Filed 9-6-01; 8:45 Am.]

BILLING CODE 4120-01-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.