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Supreme Court Hears Arguments in 'Income-First' Case

  • December 4th, 2001

On the morning of December 3, 2001, the U.S. Supreme Court heard arguments in its first elder law case. Wisconsin Dep't of Health & Family Servs v. Blumer, No. 00-952. The case is an important one for the husbands and wives of people in nursing homes who are seeking to obtain Medicaid coverage of their nursing home stays. In a nutshell, the outcome of the case will decide whether the spouse who is not in the nursing home'”the 'community spouse''”will be allowed to keep more money to raise his or her standard of living.

Background of the Case

In general, the community spouse of a couple qualifying for Medicaid may keep one half of the couple''s total "countable" resources up to a maximum of $89,280 (in 2002). But in many cases, the community spouse has very little income to live on because most of the couple's income is in the name of the institutionalized spouse. To protect against the community spouse becoming impoverished in such cases, Congress established a minimum income level for community spouses, called the minimum monthly maintenance needs allowance (MMMNA). If a community spouse's income is below her MMMNA, the shortfall can be made up in one of two ways: by transferring income from the institutionalized spouse (called the 'income-first' approach) or by allowing the community spouse to keep resources above the $89,280 level, so that that the additional funds can be invested to generate more income (the 'resource-first' approach). Some states strictly follow the income-first approach, while others allow the resource-first approach, and courts have been divided on which approach federal Medicaid law actually calls for.

Why Does It Matter?

The stakes are actually quite high for some community spouses. If the income-first approach is used, the community spouse is relying on income from the institutionalized spouse to live on. If the institutionalized spouse dies, the community spouse suddenly loses that income and as a result may quickly fall into poverty. If the resource-first approach is employed, the community spouse has enough investment income to maintain her standard of living even if the institutionalized spouse passes away.

The Court Hears the Case

In the case before the U.S. Supreme Court, a Wisconsin court ruled that the state's use of the income-first rule to bring the community spouse's income up to the MMMNA violates federal Medicaid law. The plaintiff in the case, Irene Blumer, was admitted to a nursing home in 1994 and applied for Medicaid in 1996. Mrs. Blumer's local Medicaid agency denied her application because it said that she and her husband, Burnett, had too much money. But Mr. Blumer's monthly income was below his MMMNA. Mrs. Blumer appealed, arguing that because her husband's resources did not generate enough income to meet his MMMNA, he should be allowed to keep more resources. A lower court said that Mr. Blumer should not be permitted to keep more resources, but that Mrs. Blumer should give some of her income to her husband instead. But the Wisconsin Court of Appeals reversed the lower court, ruling that the federal statute does not allow states to use the income-first rule. Thus, the court said, Mr. Blumer should be permitted to raise his income by keeping more resources.

When the U.S. Supreme Court heard the case on December 3, the back-and-forth between the Justices and the attorneys representing the parties suggested that the Court was agreeing with the Wisconsin Appeals Court that federal Medicaid law requires the use of the resource-first rule. But anything can happen and we will have to await the Court's final decision, which will come some time in 2002.

For more on increasing the community spouse's resources, click here.

Local Elder Law Attorneys in Ashburn, VA

John Laster

Law Offices of John L. Laster
Falls Church, VA

Samantha Fredieu

Hale Ball Carlson Baumgartner Murphy PLC
Fairfax, VA

Margaret O'Reilly

Margaret A. O'Reilly, PC
Herndon, VA


Last Modified: 12/04/2001

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