Spousal Impoverishment Laws
California law allows the community spouse to retain a certain amount of otherwise countable resources available to the couple at the time of application. This is called Community Spouse Resource Allowance (CSRA) and it increases every year according to the Consumer Price Index. The current (2019) CSRA is $126,420. [ACWDL 18-28 (01/14/2019)]
Separate property will be counted in the total resources and subjected to the $126,420 limit. However, only non-exempt resources are counted in the spouses’ combined, countable resources at the time of application for Medi-Cal. Thus, IRA’s in the community spouse’s name, household goods, personal effects, a car, the house, jewelry, etc. are all totally excluded, regardless of value, and the at home spouse can retain these, as well as the CSRA of $126,420.
Resources acquired after the spouse is institutionalized and before he/she goes on Medi-Cal are not protected and will be counted at the time of application. However, once the spouse is eligible for Medi-Cal, any resources acquired after eligibility by the community spouse are protected and will not affect the institutionalized spouse’s eligibility. For example, if the community spouse inherited $100,000 after the nursing home spouse was on Medi-Cal, she could keep this without affecting the other spouse’s eligibility. Resources held prior to the spouse’s institutionalization may be transferred under certain conditions.
Spending Down: A spouse can spend down resources on anything, whether or not it is for his or her own benefit. Mortgage notes on property held in the names of both spouses could be paid in full by the institutionalized spouse without a period of ineligibility for transferring assets for less than fair market value.
Income: California law allows the community spouse to retain a maximum monthly maintenance needs allowance (MMMNA). The current (2019) MMMNA is $3,161. [ACWDL 18-28 (01/14/2019)] This amount is adjusted annually by a cost of living increase.
Under the “name on the instrument rule,” the community spouse may retain any income received in his/ her name alone, even if this exceeds the MMMNA. For example, if the community spouse’s monthly income (in his or her name alone) is $5,000, the community spouse may keep it all.
If the community spouse’s monthly income is less than the MMMNA of $3,090, he/she may receive an allocation from the institutionalized spouse’s income until he/she reaches the $3,090 MMMNA; file for a fair hearing to increase the CSRA to generate additional income; and/or obtain a court order to obtain additional income-generating resources. With current miniscule interest rates, it is relatively easy for a community spouse to retain assets above the CSRA, if his/her income is low.