CMS Permits States to Extend Certain Medicaid Spousal Protections to Same-Sex Couples

In a continuation of the Obama Administration's effort to extend rights to same sex couples, the Centers for Medicare & Medicaid Services (CMS) issued a new State Medicaid Director Letter 11-006 (SMDL).  There are currently federal protections against homelessness and financial ruin that apply to heterosexual couples.  The SMDL sets out steps that states are permitted to take to extend these protections to same-sex spouses and domestic partners of individuals receiving Medicaid long-term care services. The SMDL, dated June 10, 2011, was written by Cindy Mann, Director of the Center for Medicaid, CHIP and Survey & Certification, CMS to all State Medicaid Directors.  A copy is available at https://www.medicareadvocacy.org/wp-content/uploads/2011/06/Same-Sex-Partners-SMD-6-10-11-2.pdf.

The SMDL addresses provisions of Medicaid law having to do with the placement of liens against real property, the imposition of penalties for transferring assets without receiving fair market value and the recovery of property from a deceased Medicaid beneficiary's estate.  It does not address provisions that allow a spouse receiving Medicaid for long-term care services to give a portion of his or her income to the non-Medicaid spouse to protect against impoverishment.

Background

Individuals who receive Medicaid to pay for care in a nursing facility or, in certain instances, in the community, are subject to Medicaid rules that do not apply to other Medicaid beneficiaries.  These rules either require or allow the state to take certain actions against the beneficiary, but in all cases, they include protections for the spouse who is not receiving the Medicaid services.

Specifically, the rules concern a) placement of a lien on real property owned by an individual in certain institutions, b) recovery from the estate of a deceased beneficiary who received certain long-term care services and c) transfer of assets without receiving fair value in order to qualify for Medicaid long-term care services.

A.  Liens

A state may, but is not required to, place a lien on the real property of individuals residing in certain institutions, including nursing facilities, if the individuals pay most of their income to the facility (and Medicaid pays the balance).  The lien can be placed only after notice and an opportunity for a hearing have been provided to the individual.  A lien may not be placed on the individual's home if certain other persons are living there, including the individual's spouse.

B.  Estate Recovery

A state must recover certain Medicaid dollars paid out from the estates of 1) individuals in certain institutions, including nursing facilities, and 2) individuals age 55 or over when they received Medicaid services.  In the latter case, the state must recover monies paid for nursing facility care, community-based long-term supports and services, and related hospital and pharmacy services and may recover for other services.  Recovery cannot be made while the individual's spouse or minor or disabled child is alive. If the recovery is against a home, it cannot be made while certain relatives live in the home.

The state must have procedures to waive application of estate recovery "if such application would work an undue hardship as determined on the basis of criteria established by the Secretary."[1]

C.  Transfer of Assets

Individuals applying for Medicaid to pay for nursing facility or home and community-based long-term supports and services are disqualified from eligibility for payments for such services if they have divested themselves of assets for less than full value within three or five years[2] of their application for Medicaid.  These disqualifications do not apply in certain circumstances:

• If the asset transferred was the individual's home and it was transferred to a spouse or certain other relatives;
• If the asset was transferred to or for the benefit of the spouse or certain disabled individuals;
• If a showing is made that the asset was intended to be disposed of for full value or was transferred solely for a purpose other than to qualify for Medicaid or was returned to the individual;
• If the State determines that the disqualification would work an undue hardship as determined by criteria established by the Secretary.

The State Medicaid Director Letter

The SMDL makes clear that references to "the spouse" in current federal Medicaid provisions cannot apply directly to same sex couples because those references are governed by the Defense of Marriage Act, which defines a spouse as "a person of the opposite sex who is a husband or a wife."[3]

The SMDL directs States to look at other provisions of the law to adopt protections for same-sex couples.  First, with respect to liens, it reminds States that they are not obligated to use liens at all and that, if they do, the federal law merely identifies the minimum level of protection the States must offer to those on whose property they intend to place a lien. States can adopt additional protections such as adopting a policy "not to pursue liens when the same-sex spouse or domestic partner of the Medicaid beneficiary continues to lawfully reside in the home."[4]  The SMDL makes clear that such a choice would reflect the prerogative of a State to exercise its existing discretion in determining the use of liens.  It encourages (but does not require) States to include their lien criteria in the State plan.

With respect to estate recovery and transfers of assets for less than fair market value, the SMDL directs States to implement protections through the hardship provisions in each of those sections.   Concerning transfers of assets, it reminds States that they have considerable flexibility in determining whether undue hardship exists and "the circumstances under which they will not impose transfer of assets penalties."[5]  Because of this flexibility, CMS believes that States "may adopt criteria, or even presumptions, that recognize that imposing transfer of asset penalties on the basis of the transfer of ownership interests in a shared home to a same-sex spouse or domestic partner would constitute an undue hardship."[6]  (The SMDL is silent on whether this flexibility could also apply to non-home transfers, such as liquid assets, as would otherwise be allowed for a spouse.)

The SMDL similarly addresses estate recovery under the provisions that allow for waiver of recovery.  If estate recovery would cause hardship, then, at the State's discretion, "reasonable protections applicable to the same-sex spouse or domestic partner of a deceased Medicaid recipient" could be established.[7]

Again, readers are reminded that the SMDL does not address that portion of the Medicaid law that allows a spouse receiving Medicaid paid-for nursing facility or home and community-based services to set aside an amount of income for the non-Medicaid spouse to live on.

Caution

The guidance in this State Medicaid Director letter (SMDL) does not require states to do anything to protect same-sex couples.  Nonetheless, it provides the federal support for States to act, or for advocates to press their States to adopt such protections.  States that have adopted same-sex marriage laws or strong domestic partner laws should move quickly to extend these protections so that their Medicaid policies more closely align with their laws.

The release of the letter coincides with the recent White House initiative to expand outreach to the Lesbian, Gay, Bisexual and Transgender (LGBT) communities, including, among other activities, the launching of an LGBT White House web portal at http://wh.gov/lgbt.