SPOUSAL IMPOVERISHMENT PROTECTIONS INITIATIVE
A State Advocacy Guide for Understanding Spousal Impoverishment Protections, Medicaid and Same-Sex Couples SERVICES & ADVOCACY FOR GLBT ELDERS (SAGE)
YOU’VE REACHED A POINT IN YOUR LIFE WHEN YOU REQUIRE LONG-TERM CARE, but the costs are overwhelming for you and your partner. You turn to Medicaid only to discover that you must first spend down your joint retirement savings, and give up your shared home, in order to qualify for support. It’s not fair. If you and your partner were heterosexual and married, your partner could retain a portion 2
of your income and resources, and avoid spiraling into poverty. But you and your partner are legal strangers to Medicaid. In less than a year, you will exhaust your joint retirement savings. You will be forced to sell your home, and your partner will be left homeless. What you’ve discovered is that your state— as with most states across the country—has no spousal impoverishment protections under Medicaid for same-sex partners. So you decide it’s time to act. You decide that now is the time to change this inequality, joining others across every state.
CHANGE BEGINS WITH US.
‘‘
We are talking about couples who have spent their entire lives together who have to choose between long-term care for a sick partner and everything they have. This is a matter of basic human decency. We now have the opportunity to see those protections extended in every state of this country.
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Michael Adams, SAGE Executive Director, in response to an announcement by the U.S. Department of Health and Human Services that it would provide guidance to states on extending spousal impoverishment protections to same-sex couples. “Gay Couples Closer to Receiving Medicaid Spousal Protections” The New York Times (April 7, 2011)
AS THE NATION’S PRIMARY HEALTH INSURANCE PROGRAM for low-income individuals, Medicaid serves as the single largest payer of long-term care in the United States, which is often necessary for older adults and people with disabilities who rely on institutional or in-home health services. However, this type of intensive prolonged care is costly to provide, and few resources other than Medicaid help pay for these services. In addition, many Americans do not consider or cannot afford private long-term care insurance, and fewer have the sufficient personal means to fully cover these costs out-of-pocket when services are needed. Most Americans, including lesbian, gay, bisexual and transgender (LGBT) older adults, end up relying on Medicaid for long-term care.
Medicaid qualification rules include a series of “spousal impoverishment protections” that aim to prevent a healthy spouse from having to give up a family home or retirement savings, and live in poverty, in order to qualify his/her spouse for Medicaid. Unfortunately, these spousal impoverishment protections generally do not apply to same-sex couples, which can leave a same-sex partner without a home, unprotected from impoverishment. But now, states have federal guidance on how they can extend these protections to all couples—and you can help ensure that they take this important step to improve the well-being of all elders, including LGBT older adults. This policy guide provides a general overview of Medicaid, spousal impoverishment protections and its importance to same-sex couples. Also, because states vary in their Medicaid and legal frameworks, and their histories with LGBT rights, we encourage state leaders interested in this issue to contact SAGE for additional information and advice. Our goal is to ensure that all 50 states provide spousal impoverishment protections to same-sex couples.
For more information on extending these protections in your state, please visit sageusa.org/spousalimpoverishment.
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10 Things
You Should Know about Spousal Impoverishment Protections, Medicaid and Same-Sex Couples
Did you know?
Same-sex couples face higher poverty rates than their heterosexual peers; 9.1% and 4.9% among elder lesbian and gay couples respectively.
1.
As the nation’s primary health insurance program for low-income individuals, Medicaid serves as the single largest payer of long-term care in the United States, which is often necessary for older adults and people with disabilities who rely on institutional or in-home health services. Medicaid’s long-term care program has become an important safety net for the 4 percent of older adults who live in institutional settings such as nursing homes, and the 65-70 percent of elders who will utilize some form of long-term care or community-based services in their later years.1
2.
Despite the many older people in this country who rely on long-term services, this type of intensive prolonged care is costly to provide and there are few resources to help pay for these services. Annual costs for care in a nursing home or other long-term care facility average more than $68,000, while in-home services cost an average of $18,000 per year.2
1 Peter Kemper, et al., “Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?” Inquiry 42, no. 4 (2005): 335-3530. 2 National Clearinghouse for Long-Term Care, 2008.
3.
Because few Americans have private insurance or long-term care insurance that will fully cover these costs, Medicaid serves as a critical resource for people unable to pay the costs of long-term care. However, Medicaid assistance is only available to people who are very low-income, or who have depleted most of their savings to pay for care out of their own pockets.
4.
Lesbian, gay, bisexual and transgender (LGBT) older adults are especially vulnerable to poverty, have fewer sources of support and rely heavily on Medicaid and long-term care. Same-sex couples face higher poverty rates than their heterosexual peers; 9.1% and 4.9% among elder lesbian and gay couples, respectively, in contrast to 4.6% among elder heterosexual couples. Moreover, 80% of long-term care in the U.S. is provided by biological family members, yet LGBT elders are twice as likely to be single and three to four times more likely to be without children than their heterosexual counterparts.3
5.
To alleviate some of this economic hardship, in 1988 Congress extended “spousal impoverishment” protections to married heterosexual couples. These regulations protect a spouse who needs to qualify his/her spouse for long-term care under Medicaid from exhausting their joint income, losing a shared home and ending up in poverty.
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Unfortunately, these spousal impoverishment protections do not apply to same-sex couples in most states, which can leave a same-sex partner without a home and at risk of poverty. Same-sex older couples face profound financial disadvantages under the current Medicaid system, since in most states they are not entitled to protect any of their partners’ assets or income, and a non-institutionalized partner might still be forced out of his/her home even if it is jointly owned.
7.
In June 2011, the Centers for Medicare and Medicaid Services notified states that they are empowered to treat same-sex couples the same as married heterosexual couples when it comes to protection from “spousal impoverishment” under Medicaid.4 This guidance from CMS specifically referenced the ability to ensure that a same-sex partner can remain in a shared home without a Medicaid lien being applied, and the flexibility to protect same-sex partners under estate recovery and transfer of asset rules.
3 Improving the Lives of LGBT Older Adults, SAGE and Movement Advancement Project, March 2010, ii; and Goldberg, Naomi G. “The Impact of Inequality for Same-Sex Partners in Employer-Sponsored Retirement Plans,” The Williams Institute, May 2009. 4 In 2009, SAGE, Lambda Legal and The National Gay and Lesbian Task Force began advocating with CMS to issue guidance that extends the same spousal impoverishment protections to same-sex partners.
KEY TERMS
Medicaid is a program that provides medical care and nursing-home coverage for low-income individuals and families. It is funded jointly by federal and state governments, but each state manages its own Medicaid program.
A Medicaid Lien is a claim that a state puts on property (usually a home) to recover Medicaid money spent on the owner’s long-term medical care. Unless a home fits certain criteria, Medicaid can take partial or complete interest in that home, and even require its sale, to cover the costs of the person’s care. If the home is sold by surviving family members after the owner dies, Medicaid’s claim must be settled first.
Estate Recovery occurs when a state requires the sale of a home after a Medicaid recipient’s death to cover the costs of their care.
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Did you know?
Many safety net programs designed to protect older adults are built around the presumption of marriage. Yet only a few states currently allow samesex couples to marry, just a handful respect same-sex couples’ marriages from other states and, critically, the federal government does not.
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8.
The federal government is notifying—not requiring—states to adopt these protections. While the CMS guidance ensured that states understood their options and abilities to extend these protections related to lien imposition, lien and estate recovery, and transfer penalties, it did not mandate state actions nor specify how individual states could take steps to enact them.
9.
Understanding an individual state’s Medicaid framework, legal context and history with LGBT rights is essential to effectively moving this advocacy. Medicaid qualification rules vary across states, as do the related laws, regulations and sub-regulatory guidance of each state. Further, some states have broad relationship recognition laws, while many others have less recognition, even constitutional amendments forbidding marriage and civil unions for same-sex partners.
10. The responsibility for extending these protections to same-sex couples rests with state advocates. Though the guidance did not speak to asset and income spend-down rules under Medicaid for same-sex couples, it opens up a range of opportunities for advocates to broaden these spousal impoverishment protections at the state and federal level.
In Detail:
LGBT Older Adults and Long-Term Care Under Medicaid In 2010, SAGE and the Movement Advancement Project— in partnership with Center for American Progress, the National Senior Citizens Law Center and the American Society on Aging— issued its landmark report, Improving the Lives of LGBT Older Adults, along with 11 briefs that detailed key issues in the report. Improving the Lives of LGBT Older Adults provides an overview of LGBT elders’ unique needs and the policy and regulatory changes that are needed to adequately address them. The following content is taken largely from the issue brief, “LGBT Older Adults and Long-Term Care Under Medicaid.” It offers a detailed overview of spousal impoverishment protections, including an explanation of income and asset spend-down rules under Medicaid for same-sex couples. Please note that though the CMS guidance did not speak to asset and income spend-down rules, it opens up a range of opportunities for advocates to broaden these protections at the state and federal level. Please visit sageusa.org/spousalimpoverishment for more information. MEDICAID QUALIFICATION RULES vary by state, marital status, and the type of care
received. Generally, Medicaid rules require elders to “spend down” their income and assets on long-term care services until these financial resources are largely depleted before payments can be provided through Medicaid. For married heterosexual applicants, Medicaid offers exemptions to ensure that a healthy partner does not have to live in poverty to qualify a spouse for long-term care. Under these rules, if one spouse needs long-term care through Medicaid (the “long-term care beneficiary”), the other spouse (generally referred to as the “healthy spouse” or the “community spouse”) could keep the home, assets and a living-wage income. Unfortunately, these spousal impoverishment protections do not apply similarly to other types of family structures, including same-sex couples, families of choice (such as two friends who own a home together), or elder heterosexual couples who live together but are not married.
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To read the report Improving the Lives of LGBT Older Adults and related issue briefs, visit sageusa.org
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Fewer Assets Exempted in Medicaid Eligibility Formulas For a variety of multimedia resources— including fact sheets, webinars and articles— on Medicaid and LGBT older people, visit SAGE's National Resource Center on LGBT Aging at lgbtagingcenter.org
FOR A HETEROSEXUAL SPOUSE to qualify for either institutional care or long-term home and community-based services (HCBS), Medicaid typically pools the couple’s assets and allows the healthy spouse to keep the greater of 100% of the assets up to $21,912, or 50% of the assets up to a maximum of $109,560.5 In contrast, an LGBT elder with a same-sex spouse or partner must always apply as a single person (since even if married, that marriage will not be recognized under Medicaid in most states), and is therefore only entitled to keep a mere $2,000 in countable assets. The same-sex healthy partner (deemed a legal stranger under the law) can keep any and all assets in his or her own name, but is not entitled to any assets or property held by the partner receiving long-term care. (Non-countable assets include personal possessions; a motor vehicle; the applicant’s home; prepaid funeral plans; and a small amount of life insurance.) Generally, the current rules hurt low-income same-sex couples (who make up the majority of couples) while protecting a wealthy minority of same-sex couples—the exact opposite of the law’s purpose.
5 These are 2009 asset limits; limits are adjusted annually. Note that rules vary somewhat by state (for example, some states allow the healthy spouse to keep 100% of the assets up to the $109,560 cap). 6 Some states would allow Sally to keep half of the joint assets while others would allow her to keep 100% of the assets up to the legal maximum, or $109,560. 7 For example, if Marcos had $250,000 in individual assets, as a legal stranger to Joe, he would not be required to spend down any of these assets in order to qualify Joe for Medicaid.
For example, consider Joe, who must enter an institution and has $50,000 in individual assets. If Joe is heterosexual and his wife Sally has $10,000 in individual assets, Sally is entitled to keep between $30,000 and $60,000 of their combined assets, depending on the state in which she lives.6 If Joe is gay, and his partner Marcos has $10,000 in individual assets, Marcos can only keep his own $10,000. Marcos is $20,000-$50,000 worse off than Sally, simply because Medicaid rules do not recognize the relationships of same-sex couples, including legally formalized ones. Conversely, if Marcos were wealthy in this example, he could keep all of his assets, whereas Sally could not keep more than the asset limit of $109,560.7
For a real-life example of how a lack of spousal impoverishment protections can affect same-sex couples, watch the SAGE video “Bobby & Ron’s Story” at youtube.com/sageusa
HOW MEDICAID ASSET SPEND-DOWN RULES COULD IMPOVERISH SAME-SEX COUPLES
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GEORGE (L/T Care Recipient) MARIA (Healthy Spouse)
CHRISTINE (L/T Care Recipient) JUNE (Healthy Spouse)
INITIAL ASSETS
$25,000 In Joint Savings $90,000 HOME
$25,000 In Joint Savings $90,000 HOME in Christine’s name
MEDICAID SPEND-DOWN REQUIREMENTS
Maria can keep 100% of first $21,912.
Medicaid requires spend-down of half of the joint savings.
Maria can keep home.
When Christine dies, Medicaid sues June, who has inherited the home, for back costs, forcing sale of the home.
FINAL ASSETS
MARIA KEEPS $21,912 IN SAVINGS AND $90,000 HOME
JUNE KEEPS ONLY $12,500 IN SAVINGS AND IS HOMELESS
In regards to non-liquid assets, a heterosexual healthy spouse can keep the couple’s home (without equity limit), household goods, an automobile and burial funds until his or her own death. In contrast, a same-sex healthy partner—whether married or not—risks losing any or all of these assets unless the assets have been in the sole name of the healthy partner for at least five years. If the home is in the name of the long-term care beneficiary, the healthy partner risks losing the home immediately and most likely will lose it upon the death of the partner in long-term care. Even if the home is jointly owned, the healthy partner risks losing the home, and Medicaid will almost certainly place a lien on the home, creating problems if the long-term care beneficiary dies or the healthy partner needs to move. Furthermore, a same-sex couple cannot protect the healthy partner by transferring assets or property to the healthy partner. Medicaid will “look back” for five years for any asset transfers, and, if it finds any, will evoke a “penalty period,” which in effect will cost the applicant a sum equivalent to that of the asset transfer.8
Less Income Exempted in Medicaid Eligibility Rules
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Did you know? There are an estimated 1.5 million LGBT adults age 65 and older in the United States, a number that is projected to double by 2030.
TO ASSESS AN INDIVIDUAL’S ELIGIBILITY for care, Medicaid only considers the income of the long-term care beneficiary (the healthy spouse can keep all of his or her individual income). For an unmarried institutionalized individual, on average, all but about $60 per month must go toward nursing home expenses.9 However, since HCBS recipients must cover their own living expenses, most states allow unmarried HCBS recipients to keep, at a minimum, the Supplemental Security Income (SSI) rate of $674 per month, and many allow higher incomes.10
For married couples, the rules are more generous than for single elders. Medicaid law generally allows a married person to keep some personal income as described above, and to share some or all of his or her remaining income with the healthy spouse. This income sharing is capped at the maximum spousal allowance set by Medicaid, generally $1,750 per month.11
8 For example, if a person lives in a state where the average monthly cost of care has been determined to be $5,000, and that person gives away property worth $100,000 during the look-back period, he or she will be ineligible for benefits for 20 months ($100,000 ÷ $5,000 = 20). 9 The income limit (known as the personal maintenance allowance) varies by state and type of care. 10 The income limit and methodology for setting it varies by state and is generally based on some multiple of the federal Supplemental Security Income (SSI) rate or federal poverty level. 11 Spousal allowance limits also vary by state. For institutional care, $1,750 is the most typical limit for 2009, though the allowance may be as high as $2,739 per month. For HCBS, the spousal limit generally falls between the SSI rate of $674 per month and the more typical limit of $1,750. For more detail, visit elderlawanswers.com.
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Therefore, a single HCBS recipient might only be allowed an income of $674 per month, while a couple in the same state might be able to keep $2,424 per month in joint income ($674 for the Medicaid recipient and $1,750 for the healthy spouse). This profoundly disadvantages single elders because, while the cost of living for a couple averages only 35% higher than the cost of living for an individual, Medicaid might allow a heterosexual couple to keep more than three-and-a-half times as much income.12 Medicaid treats same-sex couples the same way as single elders. While heterosexual couples can use the income of the long-term care beneficiary to supplement the income of the healthy spouse, same-sex couples have no such option. So if George, who is heterosexual, earns $2,000 in monthly income and is married to Maria, who earns $750 in monthly income, Maria can use George’s income to supplement
12 Movement Advancement Project analysis based on the difference of the Federal Poverty Line in 2009 for an individual vs. a two-person household, as found at http://aspe.hhs.gov/poverty/09poverty.shtml.
Did you know? In one study, 47% of LGBT older people reported having less than $10,000 in savings and other assets, and 30% were concerned about meeting their housing and shelter needs.
her own, leaving Maria at the maximum spousal allowance of $1,750 (her $750 in income plus $1,000 from George). However, if Christine, who is a lesbian, earns $2,000 in income and is partnered with June, who earns $750 in income, June would only be left with her own $750 in income, leaving her well below the poverty line.
HOW MEDICAID INCOME RULES COULD IMPOVERISH SAME-SEX COUPLES
10 INITIAL MONTHLY INCOME HOW MEDICAID TREATS THE INCOME GIVEN A $1,750 SPOUSAL INCOME ALLOWANCE...
...AND HOW IT AFFECTS THE FINAL MONTHLY INCOME OF COMMUNITY SPOUSE
INCOME AS PERCENT OF FEDERAL POVERTY LEVEL
GEORGE
MARIA
CHRISTINE
JUNE
(L/T Care Recipient)
(Healthy Spouse)
(L/T Care Recipient)
(Healthy Spouse)
$750
$2,000
$750
$2,000 $60
$60
Personal Allowance
Personal Allowance
$1,000
$750
$0
$750
Supplement for Community Spouse
Income to Keep
Supplement for Community Spouse
Income to Keep
$940
$1,940
Nursing Home Care to Defray Medicaid’s Costs
Nursing Home Care to Defray Medicaid’s Costs
$1,750
$750
194%
83%
Well Above Poverty Line
Below Poverty Line
The Spousal Impoverishment Protections Initiative THE SPOUSAL IMPOVERISHMENT PROTECTIONS INITIATIVE will provide research, strategic guidance and technical assistance to advocates throughout the country on extending spousal impoverishment protections in their states to same-sex couples. Our goal is to protect same-sex couples in all 50 states from having to give up their shared home, spend down their assets and spiral into poverty in order for one partner to qualify for essential long-term care under Medicaid.
Through this initiative, SAGE and our partner organizations will: n
Provide policy guidance to advocates interested in implementing these protections in their unique states;
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Connect state advocates to each other to share best practices and exchange ideas;
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Host a range of training sessions on these issues at upcoming conferences and events;
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Develop a range of online activist tools that support state leaders in this advocacy; and
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Highlight the individual stories of same-sex partners affected by this inequity, as well as stories from advocates nationwide who successfully helped to extend these protections.
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Did you know? LGBT older people are half as likely as their heterosexual counterparts to have close relatives to lean on for help, and so might rely more on "families of choice" or the services of professional health care providers such as home-based care or long-term care facilities.
Interested in learning more about extending these protections in your state? Please visit sageusa.org/spousalimpoverishment
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SERVICES & ADVOCACY FOR GLBT ELDERS (SAGE) is the country’s largest and oldest organization in the country dedicated to improving the lives of LGBT older adults. The mission of SAGE is to lead in addressing issues related to lesbian, gay, bisexual and transgender (LGBT) aging. In partnership with its constituents and allies, SAGE works to achieve a high quality of life for LGBT older adults, supports and advocates for their rights, fosters a greater understanding of aging in all communities, and promotes positive images of LGBT life in later years.
ACKNOWLEDGEMENTS SAGE would like to thank the Gill Foundation for their generous support of this initiative. We would also like to thank Christy Mallory, Jennifer Pizer and Craig Konnoth at The Williams Institute, and Sean Lund and Ineke Mushovic at the Movement Advancement Project for their analysis, research and guidance on this important issue for LGBT older adults. Finally, SAGE is deeply grateful to CenterLink, Equality Federation, Lambda Legal, the National Senior Citizens Law Center, The National Gay and Lesbian Task Force and The Williams Institute for their leadership on these issues.
Photography: Valdek Dmytrowski (inside cover); Martha Gorfein (pp. 2, 7, 11 bottom); RJ Mickelson (pp. 4,5, 6, 8, 9, 11 top); Dave Sanders (p. 12); Andrew Werner (p. 1)
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