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CMS Technical Director Opines That States May Impose Penalty on Community Spouse Post- Eligibility Transfers

Posted On 10/9/2009

Roy R. Trudel, a Technical Director at the Center for Medicare and Medicaid Services ("CMS") recently opined that a state agency has the option of imposing a transfer penalty on an institutionalized spouse if the community spouse transfers protected resources after the institutionalized spouse's eligibility has been determined. Mr. Trudel's opinion, which is a reversal from statements made by previous CMS (HCFA) officials, came about as the result of an email exchange between elder law attorney Robert Mason of North Carolina and himself.

Mr. Trudel acknowledged that CMS previously had an informal policy that once the institutionalized spouse's eligibility for Medicaid was determined, the resources of the community spouse were deemed to be unavailable to the institutionalized spouse. If the community spouse transferred protected resources, no penalty would have been imposed on the institutionalized spouse. He believed that based on the U.S. Supreme Court's decision in Wisconsin v. Blumer, 534 U.S. 473 (2003), states have the option of treating post-eligibility transfers by the community spouse differently. Mr. Trudel suggested that attorneys contact state agencies directly because imposition of the penalty is at the state’s option and CMS has no information as to which states, if any, have adopted this approach.

The Education Department of AAEPA does not believe that Mr. Trudel's analysis holds true. Blumer was about the ability to favor an income first approach versus an asset first approach in determining whether an increase in the Community Spouse Resource Allowance (CSRA) is allowed. Here, the question is whether the transfer of assets which are currently treated as exempt assets (residence, car, CSRA assets) by the community spouse will effect the eligibility of the institutionalized spouse. This should not be the case, since these assets were not counted in determining the original eligibility of the institutionalized spouse.

Click here for a copy of the email exchange between Ms. Mason and Mr. Trudel is attached to this email.

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