Protecting the Healthy Spouse

The spousal impoverishment law is misnamed. It should be called an anti-impoverishment law because the purpose was to prevent the impoverishment of a healthy spouse when a sick spouse goes on Medicaid. The law’s provisions are codified at 42 U.S.C. § 1396r-5.

Resources: The deeming rules pool marital resources.[1] From that pool, the Community Spouse is allowed to keep exempt resources and an allowance from the countable resources. The allowance is known as the Community Spouse Resource Allowance (“CSRA”).[2] When calculating the CSRA, the first step is to determine which resources are exempt. Second, you must calculate the total value of all countable resources owned by the couple, regardless of how those resources are held.[3] In some States, timing is critical. For that reason, the law includes a “snapshot” date.[4] The snapshot date is the first date of continuous institutionalization. 42 USC § 1396r-5(c)(4)(1).[5] Initially, the spousal share is one-half the total of all marital resources. 42 USC § 1396r-5(c)(4)(1)(A)(ii). However, the spousal share is subject to minimum and maximum limits which are indexed for inflation. Either spouse may ask the State to calculate the spousal share prior to seeking eligibility. 1396r-5(c)(1)(B).

The CSRA minimums and maximums are calculated in 1988 dollars, which are adjusted each year.[6] In 2023, the minimum CSRA is $29,724 and the maximum is $148,620. Some States, such as Georgia, allow the Community Spouse to retain the maximum CSRA. Others, such as Tennessee, apply a formula as permitted in Subsection (f)(2).

The subsection (f)(2) formula is the greatest of:

  • The spousal resource amount,
  • The State spousal resource standard, which is the amount that the State has determined will be protected for the community spouse,
  • An amount transferred to the community spouse for her support as directed by a court order, or
  • An amount designated by a State hearing officer to raise the community spouse’s protected resources up to the minimum monthly maintenance needs allowance.

In applying the first two prongs of subsection (f)(2), States must allow the Community Spouse to keep the minimum CSRA ($29,724 in FY2023) and, if the marital assets exceed twice the minimum CSRA (meaning, in FY2023, if the marital estate exceeds $59,448), then States must adjust the CSRA so that the Community Spouse keeps one-half of marital resources up to the maximum CSRA.

In summary, all countable marital resources, except those countable resources protected for the benefit of the Community Spouse and the Medicaid resource limit, are considered available to the Institutionalized Spouse for use in paying health care costs. 42 U.S.C. § 1396r-5(c)(2).[7] Conversely, the “CSRA is not considered available to pay for the care of the institutionalized spouse and need not be ‘spent down’ in order for the applicant to be Medicaid eligible.”[8]

After eligibility is determined, resources assigned to the Community Spouse should be transferred to her to meet her needs. In fact, the transfer of “all marital resources” from the Institutionalized Spouse to the Community Spouse is a common Medicaid Planning technique. There are at least two reasons for these transfers. First, if the Community Spouse predeceases the Institutionalized Spouse, then at her death, the spousal impoverishment provisions no longer apply and the Institutionalized Spouse will be over-resourced, losing Medicaid. By placing assets in the Community Spouse’s name, she can leave assets in a testamentary special needs trust for the benefit of the Institutionalized Spouse without causing him to lose Medicaid eligibility. Second, in most States assets removed from the Institutionalized Spouse’s estate are not subject to estate recovery.


Unlike assets, income is not pooled in determining eligibility; the Community Spouse’s separate income is never considered available to the Institutionalized Spouse. See § 1396r-5(b)(1). In determining who owns a stream of income, Medicaid uses the “name on the check” rule. See § 1396r-5(b)(2)(A)(i). This applies whether the income is pension income, annuity income or otherwise. For low-income spouses, MCCA protects a minimum amount of the couple’s combined income for the benefit of the Community Spouse. If the Community Spouse’s separate income is less than the minimum monthly maintenance needs allowance (“MMMNA” – $2,288.75 month until July 1, 2023), then a portion of the Institutionalized Spouse’s income may be transferred to the Community Spouse to bring her monthly income up to certain minimum levels. In some States, such as Georgia, the diversion amount is higher because the State adopts the maximum monthly maintenance needs allowance ($3,715.50 in 2023).

Although these defaults exist to protect a Community Spouse, planning to take full advantage of them is complex. We recommend that you do so with the assistance of an Elder Law Attorney. If you would like to speak with our firm about an application for Georgia or Tennessee Medicaid, you can reach us at (706) 428-0888.

Separation and Divorce:

In some instances, separation or divorce are legitimate planning strategies. Although our prejudice is to keep families together, if the marriage is damaged and your family values allow you to consider either of these options, we can assist you in planning for either seperation or divorce. You should, however, keep in mind that certain benefits (e.g., spousal VA benefits) will be unavailable following a divorce.


1. The term “assets” is defined at 42 U.S.C. § 1396p(e)(1). In this article, we are referring to countable assets or resources. The CSRA discussed in this article is comprised of countable assets. The Community Spouse will also retain all exempt assets. Exempt assets are defined at 42 U.S.C. § 1382b, which is incorporated by reference in 42 U.S.C. § 1396r-5(c)(5). Among others, a home and adjoining land, household goods, the value of any burial space, and property essential to self-support are excluded assets. See also 42 C.F.R. § 416.1201 to § 416.1239; State Medicaid Manual § 3260.1 (definition of “Countable Resources”).

2. [MCCA] shelters from diminution a standard amount of assets (called the “community spouse resource allowance.” Wisconsin Department of Health and Family Services v. Blumer, 534 U.S. 473, 478 (2002).

3. “For purposes of this pooling of resources, title, community property laws, or state laws regarding interspousal transfers are disregarded.” Regan et al., Tax, Estate & Financial Planning for the Elderly § 10.11[3] (Matthew Bender 2003).

4. See Johnson v. Guhl, 91 F.Supp.2d at 761.

5. A continuous period of institutionalization is 30 consecutive days in medical institutions and/or nursing facilities. State Medicaid Manual, CMS Publication 45, § 3260.1.

6. 42 U.S.C. § 1396r-5(g).

7. Johnson v. Guhl, 91 F.Supp.2d at 761. 8. Johnson v. Guhl, 166 F. Supp.2d at 47.

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