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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2002
- **Citation:** 534 U.S. 473

## Text

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0 SEP 7 200
No. 00-952
In the Supreme Court of the United States

—— —— — — —

2 —U—4—. ==

WISCONSIN DEPARTMENT OF HEALTH AND FAMILY
SERVICES, PETITIONER

V.

IRENE BLUMER

ON WRIT OF CERTIORARI
TO THE COURT OF APPEALS OF WISCONSIN, DISTRICT IV

ee

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

13

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)

V

IV
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)

VI
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

4

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

1

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

V.
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)

2

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

3

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

4

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.

5

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-

6

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).

7

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.

8

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.

9

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

10

(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

11

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.”

12

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

13

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-

14

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

15

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

16

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

17

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-

18

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

\
19

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

20

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.

21

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-

22

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

23

(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,

24

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

25

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

26

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

27

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).

28

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-

30

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

31

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,

4a

(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,

5a

(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);

6a

(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

7a

(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)

8a

(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).

(C) Property with no instrument

(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.

(c) Rules for treatment of resources

(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
(C) the State determines that denial of eligibility
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.
(C) A family allowance, for each family member,
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.

(C) Cap on minimum monthly maintenance
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.

(C) Revision of community spouse *
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.
T
— — — —
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.

2
9 Geant dieae
erated by the allowance) is not adequate to raise the
tenance needs allowance. At § 431.260(c), we propose to

.

2

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0438%3A11. Public record. Not legal advice.