Spousal Impoverishment Background

In the coming months, Minnesota will be required to impose new financial eligibility rules on married couples age 65 and younger who need Home and Community Based Services (HCBS) waivers. These “spousal anti-impoverishment” eligibility rules would require Minnesota to include the income and assets of both spouses in determining eligibility, not just the person seeking the waiver as is the current practice. Should the new rules go into effect, married couples receiving waivered services may lose their children’s college savings or the unassisted spouse’s retirement savings. This change could result in obtaining an unwanted divorce to maintain financial stability.

The eligibility rule change is spurred by a provision in the Affordable Care Act (ACA) to improve financial eligibility rules for HCBS waivers. This provision of the ACA was drafted with good intentions, and will positively impact people receiving waivered services in nearly every other state. Unfortunately, Minnesota is the only state that already had more favorable rules for working age families affected by the serious disability of one spouse. Given that Minnesota is an outlier among states, it has been very difficult to obtain approval from federal regulators to continue our state’s policy.

Currently, the Health and Human Services (HHS) Omnibus Bills have been passed in both the House and Senate and are awaiting comparison in a conference committee.

In the Senate, the HHS Bill includes a provision that would raise the state’s Spousal Asset Allowance to the maximum allowed by federal law, from the current $33,000 to $119,000. This would help some people under age 65 who would otherwise lose their savings.

In the House, the HHS bill includes a provision that would allow people using the HCBS waivers to qualify as having an undue hardship if they would be terminated from Medical Assistance (and lose HCBS waivers) due to excess spousal assets. The bill has a contingent repeal so that if Center for Medicare and Medicaid Services (CMS) objects to the undue hardship provision, the legislation will be automatically repealed in 30 days.