DEPARTMENT OF HEALTH AND HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, MD 21244-1850 
 
 
 
SMD# 15-001 
ACA# 32 
 
  
May 07, 2015 
 
  Re:  Affordable Care Acts Amendments 
to the Spousal Impoverishment Statute 
 
Dear State Medicaid Director:  
 
This letter provides guidance to states on implementation of section 2404 of the Affordable Care 
Act which amended section 1924 of the Social Security Act (the Act) (Protection for Recipients 
of Home and Community-Based Services Against Spousal Impoverishment).  
 
Background 
 
Section 1924 of the Act requires the use of special financial eligibility rules, generally referred to 
as the spousal impoverishment rules, for certain married Medicaid applicants and beneficiaries 
who need or receive long-term services and supports (LTSS).  Prior to enactment of section 
1924, married individuals requiring Medicaid-covered LTSS were commonly faced with either 
forgoing services or leaving the spouse still living at home with little income or resources.  The 
spousal provisions were enacted in 1988 to address this issue.  In determining the eligibility of 
married applicants for Medicaid coverage of care in a medical institution, nursing facility or, at 
state option, home and community-based services provided under section 1915 waivers, states 
were required to exclude a certain share of the couples income and resources.1 Section 2404 of 
the Affordable Care Act amended section 1924, for the five-year period beginning January 1, 
2014, to require states to apply the spousal impoverishment rules to additional individuals 
receiving LTSS. This guidance describes how states would apply the statute in making Medicaid 
eligibility determinations. 
 
Definition of an Institutionalized Spouse 
 
The spousal rules apply to married individuals who meet the definition of an institutionalized 
spouse in section 1924(h) (1).  Prior to the Affordable Care Act, states were required to include 
in this definition all married individuals actually in institutions, and had the option to include 
individuals described in section 1902(a)(10)(A)(ii)(VI) of the Act, referred to as the 217 
category,2 which is composed of individuals who, in the absence of home and community-based 
                                                           
1 For the 2015 standards, see http://medicaid.gov/medicaid-chip-program-information/by-
topics/eligibility/downloads/2015-ssi-and-spousal-impoverishment-standards.pdf. 
  
2 The reference is based on its regulatory citation, 42 C.F.R. 435.217  Page 2  State Medicaid Director 
 
services provided through a 1915 waiver,  would require care in an institutional setting and who 
would generally not qualify for Medicaid under other categories. 
 
The Affordable Care Act amended section 1924(h)(1) to require, for the five-year period 
beginning January 1, 2014, that states include in the definition of an institutionalized spouse 
married individuals who are eligible for medical assistance for home and community-based 
services provided under subsection (c), (d), or (i) of section 1915, under a waiver approved under 
section 1115, or who [are] eligible for such medical assistance by reason of being determined 
eligible under section 1902(a)(10)(C) or by reason of section 1902(f) or otherwise on the basis of 
a reduction of income based on costs incurred for medical or other remedial care, or who is 
eligible for medical assistance for home and community-based attendant services and supports 
under section 1915(k). . . . ''  
 
The new definition eliminates the discrete reference to the 217 category and applies to all 
married individuals eligible for home and community-based services (HCBS) delivered through 
1915(c) waivers, 1915(i) or (k) state plan benefits, or section 1115 waivers who are married to a 
spouse who is not in a medical institution or nursing facility.3 Also included are those who 
qualify through a spend down, either as medically needy or categorically needy in a 209(b) state. 
This expanded definition (hereafter new definition) means that states must apply the spousal 
rules to Medicaid applicants who historically have not had their eligibility determined under 
these rules. 
 
Individuals eligible for 1915(c), (i) and (k) Services  
 
As a result of the new definition, section 1924(a) (1) requires states to apply the spousal 
impoverishment rules in determining eligibility for married Medicaid applicants who are eligible 
for services under 1915(c), (i) or (k), are married to a spouse who is not in a medical institution 
or nursing facility and are likely to require such services for at least 30 consecutive days. For 
married individuals who may meet the eligibility requirements for a category to which 1915(i) or 
(k) benefits are available in the state, or which is included in an approved 1915(c) waiver, we 
interpret the statute to result in application of the spousal eligibility rules to those who meet the 
coverage requirements for such services. Thus, the state would determine Medicaid eligibility 
and also make an assessment that the applicant satisfies other criteria for receipt of services 
under 1915(c), (i) or (k). 
 
For example, a married Medicaid applicant receives Social Security Disability Insurance (SSDI) 
benefits (and not Supplemental Security Income). The only non-institutional optional category 
covered in the state plan that includes people with disabilities is the aged and disabled (A/D) 
poverty level category (authorized under section 1902(a)(10)(A)(ii)(X) of the Act). The state has 
included the A/D poverty level category in an approved 1915(c) waiver, and the individual 
requests HCBS at application.  The state would evaluate the individuals eligibility for the A/D 
category using the spousal eligibility rules if the individual meets the criteria for the waiver.   
Applying spousal eligibility rules would mean counting only the applicants income and 
                                                           
3 The new definition includes HCBS provided under section 1915(d) waivers.  As we noted in our final regulation 
on HCBS waivers and state plan benefits, no state presently operates a section 1915(d) waiver.  See 79 Fed. Reg. 
2948, 2956. (January 16, 2014).  For brevity, references to section 1915(d) are therefore omitted.   Page 3  State Medicaid Director 
 
comparing that income to a household of one for income eligibility for the category, and 
removing the community spouses resource allowance (CSRA) from the total combined 
resources of the spouses in the individuals resource eligibility determination.  
Similarly, if the same applicant could not receive 1915(c) services because the applicant does not 
meet the targeting criteria for a 1915(c) waiver operating in the state, but is eligible for an 
approved 1915(i) benefit available under the state plan, spousal eligibility rules would apply to 
the applicants eligibility determination.  In either case, the individual would be enrolled in the 
A/D poverty level category if eligible using spousal eligibility rules, provided that the individual 
is determined to need the relevant HCBS as part of the underlying eligibility determination.  
Eligibility for the HCBS described in the new definition is the basis for using spousal eligibility 
rules.  (See below the discussion on Determining Eligibility for HCBS.)  
 
The new definition of an institutionalized spouse also specifically includes married individuals 
eligible for HCBS by reason of section 1902(a)(10)(C) (medically needy), or through a spend 
down in a 209(b) state.4 Thus, such married individuals with income above the threshold for any 
optional state plan categories in a state that covers the medically needy, or above the 
categorically needy standard in a 209(b) state, should be permitted the option to spend down to 
qualify, and the community spouses income and community spouses resource allowance 
(CSRA) would not be deemed available to the individual for the purpose of spend down.  
 
For example, if the married applicant is determined, based on the separation of income mandated 
by the spousal eligibility rules, to have income above the poverty level and the state covers the 
medically needy, the statute requires that the individual be permitted to spend down to the states 
medically needy income level (MNIL), based on the difference between the individuals income 
and the MNIL for a one-person household. In addition, no part of the CSRA would be deemed 
available to the individual in the resource eligibility determination.  If the individual qualifies on 
this basis, the individual would be eligible for coverage of all services provided under the state 
plan to his or her medically needy group.  
 
Determining Eligibility for HCBS 
 
As described above, an individual must be eligible for HCBS provided under specified sections 
of the statute for the spousal eligibility rules to apply.  We interpret this to mean that an 
individual who would meet the nonfinancial eligibility requirements for any new HCBS 
referenced in the new definition that is covered in the state would be eligible for medical 
assistance for home and community-based services . . . within the meaning of the statute. This 
means that a state would determine a married applicants need for the relevant HCBS within the 
underlying Medicaid eligibility process in order to determine if spousal eligibility rules apply.  
 
The determination of need for HCBS would be triggered when a married applicant requests 
HCBS coverage offered under the state plan. States should permit applicants a method of 
requesting such HCBS coverage.  This could be done through a supplemental form that asks 
applicants if they need HCBS, or a process whereby written or verbal requests for HCBS are 
                                                           
4 Under section 1902(f) of the Act, and 42 C.F.R. 435.121, 209(b) states must permit individuals applying for 
Medicaid on the basis of being aged, blind or disabled to reduce their available income by incurred medical 
expenses, even if the state does not provide medically needy coverage to these groups.   Page 4  State Medicaid Director 
 
acknowledged and used to determine whether spousal impoverishment rules should apply. The 
single streamlined application contains a question regarding whether an applicant has any health 
conditions that cause limitations in activities, and many states have questions in their non-
modified adjusted gross income (MAGI) applications that solicit information from applicants on 
whether they need assistance with activities of daily living. Affirmative answers to these 
questions by married applicants would be the most practical basis for proceeding to evaluate 
whether the applicants meet the criteria for the relevant HCBS. 
 
States would perform the evaluation of the need for HCBS with respect to the services for which 
an applicant may be eligible under the state plan or the states approved waivers.  For example, 
where a state covers 1915(i) services and operates a 1915(c) waiver, and a married applicant who 
indicates a need for HCBS does not meet the targeting criteria for the states 1915(i) benefit, the 
state would limit its HCBS assessment to whether the individual meets the waivers clinical 
standard (assuming the individual meets the targeting criteria for the waiver).  
 
Importantly, for those eligible through use of the spousal eligibility rules based on their need for 
HCBS, the statute does not require that they actually receive the HCBS for which they are 
eligible.  While the discrete HCBS-related eligibility categoriesthe 217 category and the 
1915(i)-related category described in section 1902(a)(10)(A)(ii)(XXII)generally impose actual 
receipt of 1915(c) or (i) services as an eligibility condition, the new definition explicitly applies 
to individuals eligible for the relevant HCBS.  
 
For example, where an applicant meets the financial eligibility requirements for the A/D poverty 
level category by application of spousal eligibility rules based on meeting a 1915(c) clinical 
standard (as in one of the examples described above), the individual would be enrolled in the 
A/D poverty level category even if the individual will not receive 1915(c) services upon 
enrollment because there is a waiting list for the waiver.  If, however, an individual who is 
eligible under spousal eligibility rules based on a need for HCBS is later determined not to meet 
the coverage requirements for 1915(c), (i) or (k) services, the individuals financial eligibility 
would be re-determined using the standard methodology that applies to the category in which the 
individual is enrolled.  
 
Alternatively, however, because states are generally required in the application process to collect 
information on the income and, where applicable, resources of a Medicaid applicants spouse, 
regardless of whether spousal eligibility rules are applied, the state may enroll the individual 
without screening the applicants need for HCBS if it can determine that a married applicant 
potentially in need of HCBS is eligible for Medicaid even if the spouses income and resources 
are deemed available.   
 
Application of Spousal Rules to Section 1115 Waivers 
 
As mentioned above, the new statutory definition of an institutionalized spouse includes 
individuals eligible to receive HCBS under a section 1115 waiver.  The provision does not 
specifically define the type of HCBS for which a married section 1115 applicant must be 
eligible.  In each of the other HCBS examples identified in the new definition1915(c), (i) and 
(k)an eligible individual who meets the nonfinancial requirements for coverage is potentially  Page 5  State Medicaid Director 
 
eligible for a multiple-service HCBS package. In the context of section 1915(c) waivers and the 
1915(k) benefit, an individual is only eligible for the coverage if he or she would otherwise be 
institutionalized in the absence of the HCBS. 
 
We interpret the statutes reference to HCBS provided under a section 1115 waiver to apply to 
HCBS in which: a) an individual who meets a clinical eligibility standard  is potentially eligible 
for a multi-service benefit package of the type authorized under 1915(c), (i), or (k); or b) an 
individual is eligible for coverage of a service or services of the type provided  under 1915(c), (i) 
or (k) where the individual demonstrates that, in the absence of such service(s), the individual 
would otherwise require the level of care provided in an institution.  In either case, where a 
married individual is seeking coverage for such HCBS under a section 1115 waiver and is 
subject to an income and asset test, the spousal eligibility rules would apply.  The applicants 
need for HCBS would be determined in the eligibility process in the same manner described 
above.  
 
Section 1924 and the Post-eligibility Treatment of Income 
 
Section 1924 imposes both eligibility and post-eligibility rules.  The post-eligibility rules, or 
post-eligibility treatment-of-income (PETI) rules, require that a state Medicaid agencys payment 
for institutional and HCBS waiver services be reduced by the amount of available income a 
beneficiary has after certain deductions are made.  Required deductions include a personal needs 
allowance, an amount for the maintenance needs of the individuals spouse and family, and 
certain other deductions.5 Under these regulations, when spousal rules apply to individuals 
subject to PETI, the amount deducted from the beneficiarys income for the community spouse 
and family must be determined based in accordance with the formula mandated by section 
1924(d).  
 
These regulations apply only to HCBS waiver enrollees eligible under the 217 category.6 By 
virtue of the new statutory definition, for married individuals who are enrolled in the 217 
category, states are required to deduct in the PETI determination, for the maintenance needs of a 
community spouse and family members, the amounts required under section 1924(d).  
Additionally, for all section 1115 waiver participants who are subject to PETI rules, all married 
individuals must have the deductions for the community spouse and family members calculated 
under section 1924(d). 
 
For all other individuals whose eligibility is determined using the spousal rules of section 1924 
on the basis of the new definition of an institutionalized spouse, section 1924s PETI rules will 
not be applied because these individuals are not subject to PETI rules.  
 
The New Definition of an Institutionalized Spouse and MAGI  
 
Because 217 category enrollees are the only HCBS beneficiaries subject to PETI rules under 
current regulations, and as the 217 category is exempt from MAGI per 42 C.F.R. 435.603(j)(4), 
section 1924s PETI rules are not relevant for individuals whose eligibility is based on MAGI 
                                                           
5 See 42 C.F.R. 435.700 et seq., and 42 C.F.R. 435.832. 
6 We have also authorized application of PETI rules to section 1115 waiver participants receiving HCBS whose 
financial eligibility determinations are effectively identical to 217 financial eligibility determinations.   Page 6  State Medicaid Director 
 
even if receiving HCBS.  Likewise, because MAGI individuals may not be subject to a resource 
test, the CSRA is also not relevant for MAGI individuals.  For a married Medicaid applicant 
potentially eligible for HCBS and being screened for a MAGI category, only section 1924s 
mandatory separation of income between spouses could be implicated.  However, we have 
concluded that section 1924s income deeming rules do not effectuate a change in the definition 
of a MAGI household described in our regulations at 435.603(f), under which a married 
individuals household includes his or her spouse if the spouses file their tax returns jointly or are 
living together.   
 
Therefore, states should screen a married applicant subject to MAGI rules under the MAGI 
household rules of 435.603(f) and enroll the applicant if he or she is eligible. If the individual is 
not eligible and requests HCBS coverage, the instructions provided above, under Determining 
Eligibility for HCBS, will apply.   
 
Implementation Considerations 
 
The change to section 1924s definition of an institutionalized spouse became effective January 
1, 2014.  This change affects initial eligibility determinations and in some circumstances 
redeterminations of eligibility.  States that have not already done so should begin work on 
conforming their eligibility practices for married individuals potentially in need of HCBS as 
soon as possible.  We are available to provide technical assistance to states to facilitate 
implementation of eligibility policies consistent with the statute in light of this guidance.  
 
If you have questions about this guidance, please contact Gene Coffey at 410-786-2234, or 
gene.coffey@cms.hhs.gov, or contact your SOTA team lead.  
 
            Sincerely, 
 
               /s/ 
 
            Vikki Wachino 
            Director 
 
cc: 
 
National Association of Medicaid Directors 
 
National Academy for State Health Policy 
 
National Governors Association 
 
American Public Human Services Association 
 
Association of State and Territorial Health Officials 
 
Council of State Governments