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Income-First Eligibility Rules OK'd by Court


Feb. 22, 2002 -- The Supreme Court ruled Wednesday in a case that has implications for married couples when one partner is institutionalized and trying to get Medicaid coverage and the other is living at home and trying to make ends meet.

Irene Blumer was admitted to a Wisconsin nursing home in 1994. Two years later, through her husband Burnett, she applied for Medicaid coverage. But the Green County Department of Human Services (County) determined, using a common "income-first" calculation, that the couple had too much in the way of assets, and concluded that she wouldn't be eligible until the couple had spent down roughly $14,500.

Medicaid eligibility depends on (among other things), a couple not having income beyond a certain amount, and also on not having other resources beyond a certain amount.

The Medicare Catastrophic Coverage Act of 1988 (MCCA) included provisions to ensure that someone whose spouse is institutionalized (in a nursing home or other institution) doesn't have to be impoverished in order for the institutionalized spouse to receive Medicaid. The community spouse -- the one who has not been institutionalized -- is allowed a Community Spouse Resource Allowance (CSRA) that doesn't count towards the assets and income of the institutionalized spouse, when determining his or her Medicaid eligibility.

If the couple can show that unless a higher-than-usual CSRA is approved the community spouse will not be able to maintain a minimum level of income, their CSRA can be increased.

But it isn't always clear how to calculate all this: in particular, Wisconsin law requires the income-first approach that meant Irene Blumer wasn't eligible. If, however, Wisconsin had used a "resources-first" approach, in which those extra assets would have been treated as $63 in monthly income (that's the income that those assets generate), Burnett Blumer's income would have been less than he was entitled to, and Irene Blumer would have been eligible for Medicaid.

The Blumers appealed, arguing that Wisconsin should have used a resources-first approach in determining Irene Blumer's eligibility. Their appeal was upheld by the Wisconsin Court of Appeals. There hasn't been a consensus in state courts on this matter: the Wisconsin Court of Appeals can cite precedent in Ohio, but in Massachusetts and New York, decisions in similar cases have gone the other way. And within Wisconsin, the income-first approach has tended to be supported by court decisions.

The Supreme Court, in a 6-3 decision, overturned the Wisconsin Court of Appeals. Justice Ginsberg, writing for the majority, concluded that, "Far from precluding Wisconsin's chosen approach, the MCCA's design offers affirmative support for the permissibility of the income-first method," and that "Eliminating the discretion to choose income-first would hinder a State's efforts to 'strik[e] its own balance' in the implementation of the Act."

Justice Stevens, however, has argued that the Wisconsin statute requires the institutionalized spouse to make resources available to the community spouse before an increased CSRA can be approved -- and that the MCCA permits such a transfer of resources from the institutionalized spouse to the community spouse only after eligibility has been determined, and certainly doesn't require it.

The case is Wisconsin Department of Health and Family Services v. Blumer, No. 00-952.

To read the Court's opinion for yourself, you can go to http://supct.law.cornell.edu/supct/html/00-952.ZO.html

To read Justice Stevens' dissent, which has been signed by Justices O'Connor and Scalia, you can go to http://supct.law.cornell.edu/supct/html/00-952.ZD.html

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