18.6 Spousal Impoverishment Income Allocation

18.6.1 Spousal Impoverishment Income Allocation Introduction
18.6.2 Community Spouse Income Allocation
18.6.3 Dependent Family Member Income Allowance

18.6.1 Spousal Impoverishment Income Allocation Introduction

After an institutionalized person is found eligible, they may allocate some of their income to the community spouseSomeone who is 1) Married to an institutionalized person and 2) Not living in a nursing home or other medical institution for 30 or more consecutive days. and any dependent family members who live with the community spouse.

Dependent family members are defined as follows:

Children under the age of 18, of either parent
Children of any age, of either parent, who are claimed as tax dependents under the Internal Revenue Code (IRC)
Siblings of either the institutionalized person or the community spouse who are claimed as tax dependents under the IRC
Parents of either the institutionalized person or the community spouse who are claimed as tax dependents under the IRC

Income that is allocated to the community spouse must be given (or made available) to the community spouse each month for it to be allowed as a post-eligibility income deduction for the institutionalized person. Income that is allocated to a dependent family member does not have to be given to the dependent family member.

Note:

Income allocated to the community spouse is countable income for the community spouse if they apply for health care.

The institutionalized person must decide how much income to allocate to their community spouse. They may allocate an amount that brings the community spouse’s income up to the maximum allocation (see Section 18.6.2 Community Spouse Income Allocation) or they may choose to allocate a lesser amount.

Since the institutionalized person may have medical costs that are not covered by Medicaid, they may need to keep some income rather than allocating the maximum allowable amount.

Example 1:

Finella is in a nursing home and open for Institutional Medicaid. Her husband Teddy lives in the community. Finella’s monthly income is $500. She incurs $80 in noncovered medical expenses each month. She decides to give $375 to Teddy, keeping only her $45 personal needs allowance (see Section 39.4.3 LTC Post-Eligibility Allowances) and $80 to pay for her medical expenses (see Section 27.7.7 Medical or Remedial Expenses and Payments for Noncovered Services). These post-eligibility income deductions and allowances reduce her nursing home patient liability amount to $0.

18.6.2 Community Spouse Income Allocation

The maximum amount of income that the institutionalized spouse can allocate to their community spouse is determined as follows:

Find the Community Spouse Lower Income Allocation Limit. This amount is updated annually and can be found in SECTION 39.4.4 LTC SPOUSAL IMPOVERISHMENT POST-ELIGIBILITY ALLOWANCES AND COMMUNITY SPOUSE ASSET SHARE.

Determine the excess shelter allowance, calculated as the community spouse’s shelter expenses that are in excess of the Shelter Base Amount. The Shelter Base Amount is updated annually and can be found in Section 39.4.4 LTC Spousal Impoverishment Post-Eligibility Allowances and Community Spouse Asset Share.

Note:

Do not grant the excess shelter allowance for HCBW cases where the institutionalized person lives together with the community spouse.

Allowable shelter expenses include:

Rent
Mortgage principal and interest
Taxes (including special assessments) and homeowner's or renter's insurance for the principal place of residence.
Any required maintenance fee if the community spouse lives in a condominium or cooperative.

The standard utility allowance established under FoodShare. See the FoodShare Wisconsin Policy Handbook, Section 8.1.3 Deductions for the current standard utility allowance amounts.

If the community spouse pays:	Add:
Heat and utilities	HSUA (Heating Standard Utility Allowance)
Utilities only	LUA (Limited Utility Allowance)
Telephone only	PUA (Phone Utility Allowance)

If the community spouse lives in a condominium or cooperative where the maintenance fee includes utility expenses, reduce the standard utility allowance by the amount of utility expenses included in the maintenance fee.

Determine the lesser of:
1. The sum of the Community Spouse Lower Income Allocation Limit (Step 1) and the excess shelter allowance (Step 2), if applicable.
2. The Community Spouse Income Allocation Maximum. This amount is updated annually and can be found in Section 39.4.4 LTC Spousal Impoverishment Post-Eligibility Allowances and Community Spouse Asset Share.
Subtract the community spouse’s monthly gross income from the amount determined in Step 3. Use the EBD rules for countable income, but do not give earned income, unearned income, or work-related deductions.

The result is the maximum amount of income that the institutionalized person can give to their community spouse. They may give an amount less than this, but not more unless ordered by a fair hearing decision or a court order.

A court or fair hearing can increase the community spouse income allocation if it determines the spouse is not able to provide for his or her necessary and basic maintenance needs with the amount allocated.

18.6.3 Dependent Family Member Income Allowance

The institutionalized person can allocate a certain amount of their income to dependent family members (as defined in Section 18.6.1 Spousal Impoverishment Income Allocation Introduction) who live with the community spouse.

Each dependent family member’s income allowance is calculated as follows:

Subtract the dependent family member’s actual income from the Dependent Family Member Income Allowance Standard. This amount is updated annually and can be found in SECTION 39.4.4 LTC SPOUSAL IMPOVERISHMENT POST-ELIGIBILITY ALLOWANCES AND COMMUNITY SPOUSE ASSET SHARE. Use the EBD rules for countable income, but do not give earned income, unearned income, or work-related deductions.
Divide the result by three.

This page last updated in Release Number: 22-02
Release Date: 08/01/2022
Effective Date: 08/01/2022