907 KAR 20:035. Spousal impoverishment
and nursing facility requirements for Medicaid.
TO: KRS 194A.505, 205.520, 205.619, 304.14-640, 304.14-642, 38 U.S.C. 5503
AUTHORITY: KRS 194A.030(2), 194A.050(1), 205.520(3), 42 C.F.R. Part 435, 42
U.S.C. 1396a, 1396d, 1396r-5
FUNCTION, AND CONFORMITY: The Cabinet for Health and Family Services has
responsibility to administer the Medicaid Program. KRS 205.520(3) authorizes
the cabinet, by administrative regulation, to comply with a requirement that
may be imposed, or opportunity presented, by federal law to qualify for federal
Medicaid funds. This administrative regulation establishes spousal impoverishment
and nursing facility requirements for Medicaid eligibility determinations for individuals
for whom resources are considered for Medicaid eligibility purposes.
1. Resource Assessment. (1) Pursuant to 42 U.S.C. 1396r-5(c)(1)(B), an
assessment of the joint resources of an institutionalized spouse and the
community spouse shall be made:
Upon request of either spouse at the beginning of a continuous period of
institutionalization of the institutionalized spouse; and
Upon receipt of relevant documentation of resources.
Resources that have been protected from estate recovery due to a long-term care
partnership insurance policy shall be excluded from the eligibility
determination by the eligibility worker at the time of application.
An assessment shall contain the total value of the joint resources and
computation of the spousal share.
The department shall complete the assessment within forty-five (45) days
following submission of complete documentation or verification.
Upon completion of a resource assessment, each spouse shall:
Receive a copy of the assessment; and
Be notified that the right of appeal of the assessment shall exist at the time
the institutionalized spouse applies for Medicaid.
2. Protection of Income and Resources of the Couple for Maintenance of the
Community Spouse. (1) The income provisions established in this subsection shall
apply for an individual beginning a continuous period of institutionalization
on or after September 30, 1989.
Except as provided in paragraph (b) of this subsection, during a month in which
an institutionalized spouse is in the institution, income of the community
spouse shall not be deemed available to the institutionalized spouse.
In determining the income of an institutionalized spouse or community spouse,
after the institutionalized spouse has been determined or redetermined to be
eligible for Medicaid, the provisions of 42 U.S.C. 1396r-5(b)(2) shall apply.
The resource provisions established in this subsection shall apply for an
individual beginning a continuous period of institutionalization on or after September
Except as provided in subsection (4)(b) of this section, in calculating the
resources of an institutionalized spouse at the time of an initial eligibility
determination for a benefit under Medicaid, the resources held by either the
institutionalized spouse, community spouse, or both, shall be considered to be
available to the institutionalized spouse.
The following protected amounts shall be deducted from a couple's combined
countable resources at the time of the determination of initial eligibility of
the institutionalized spouse:
The greater amount of:
The spousal share which shall not exceed a maximum of $60,000 to be increased
for each calendar year in accordance with 42 U.S.C. 1396r-5(g); or
The state resource standard; and
If applicable, an additional amount transferred under a court support order; or
If applicable, an additional amount designated by a hearing officer.
The institutionalized spouse shall not be ineligible by reason of resources
determined under paragraphs (a) and (b) of this subsection to be available for
the cost of care in the following circumstances:
The institutionalized spouse has assigned to the department his or her right to
support from the community spouse;
The institutionalized spouse lacks the ability to execute an assignment due to
physical or mental impairment; and
The state has the right to bring a support proceeding against a community
spouse without the assignment; or
The department determines that denial of eligibility would work an undue
After eligibility for benefits is established for the individual:
During the continuous period in which an institutionalized spouse is in an
institution and after the month in which an institutionalized spouse is
determined to be eligible for a Medicaid benefit, the resources of the
community spouse shall not be deemed available to the institutionalized spouse;
Resources of the institutionalized spouse protected for the needs of the
community spouse shall be considered available to the institutionalized spouse
if the resources are not transferred to the community spouse within six (6)
months of the initial eligibility determination.
The equity value of an automobile in excess of the limits established by 907
KAR 20:025 shall not be included as a countable resource.
The provisions established in this subsection shall apply with regard to
protecting income for a community spouse.
After an institutionalized spouse is determined or redetermined to be eligible
for Medicaid, in determining the amount of the spouse's income that is to be
applied monthly to payment for the costs of care in the institution, there
shall be deducted from the spouse's monthly income the following amounts in the
A personal needs allowance of forty (40) dollars plus a mandatory withholding
from income, including a mandatory payroll deduction that is a condition of
employment and federal, state, and local taxes that the government requires the
payer to deduct before payment is made to the payee;
A community spouse monthly income allowance to the extent income of the
institutionalized spouse is made available to, or for the benefit of, the
A family allowance determined in accordance with the definition of other family
member's maintenance standard; and
An amount for incurred expenses for medical or remedial care for the
The community spouse income allowance shall be the sum of the standard
maintenance amount and the excess shelter allowance, not to exceed the
community spouse maintenance standard.
The community spouse maintenance standard shall be set at $1,500 per month, to
be increased for each calendar year in accordance with 42 U.S.C. 1396r-5(g).
If a court has entered an order against an institutionalized spouse for monthly
income for the support of the community spouse, the community spouse income allowance
for the spouse shall not be less than the amount ordered.
The provisions established in this subsection shall apply regarding a transfer
of resources from an institutionalized spouse.
An institutionalized spouse may, without regard to the prohibition against
disposal of assets for less than fair market value, transfer to the community
spouse, or to another for the sole benefit of the community spouse, an amount
equal to the spousal protected resource amount to the extent the resources of
the institutionalized spouse are transferred to, or for the sole benefit of,
the community spouse.
The transfer shall be made as soon as practicable after the initial
determination of eligibility, taking into account the time necessary to obtain
a court order under paragraph (c) of this subsection.
The spousal protected resource amount shall be the greater of:
The spousal share which shall not exceed a maximum of $60,000 to be increased
for each calendar year in accordance with 42 U.S.C. 1396r-5(g); or
The state spousal resource standard.
The state spousal resource standard shall be set at $20,000.
For an individual, the spousal protected resource amount may be a higher amount
established by a hearing officer or a higher amount transferred under a court
order as specified in paragraph (c) of this subsection.
If a court has entered an order against an institutionalized spouse for the support
of a community spouse, the prohibition against disposal of assets for less than
fair market value shall not apply to the amount of resources transferred
pursuant to the order for the support of the spouse.
Except for a transfer of resources to the community spouse as specified in
subsection (4) of this section, the transfer of resource policies established
by 907 KAR 20:030 shall apply.
The department shall send the notice specified in paragraph (b) of this subsection
to both spouses upon a:
Determination of eligibility for Medicaid of an institutionalized spouse; or
The institutionalized spouse;
The community spouse; or
A representative acting on behalf of either spouse.
The notice shall state the:
Amount of the community spouse monthly income allowance;
Amount of a family allowance, if any;
Method of computing the amount of the community spouse resources allowance; and
Spouse's right to an administrative hearing in accordance with 907 KAR20:060.
Both the institutionalized spouse and community spouse shall be entitled to an
administrative hearing in accordance with 907 KAR 20:060 if the spouse is
dissatisfied with the action of the agency including determination of the
The community spouse monthly income allowance;
The amount of monthly income determined to be otherwise available to the community
The attribution of resources at the time of the initial eligibility determination;
The determination of the community spouse resource allowance.
If either the institutionalized spouse or community spouse establishes during
the administrative hearing that the community spouse needs income above the
level otherwise provided by the monthly maintenance needs allowance, due to an
exceptional circumstance resulting in significant financial duress, an amount
adequate to provide the necessary additional income shall be substituted for
the monthly maintenance needs allowance.
If either spouse established during the hearing process that the community
spouse resource allowance, in relation to the amount of income generated by an
allowance, is inadequate to raise the community spouse's income to the monthly
maintenance needs allowance, there shall be substituted for the community
spouse resource allowance an amount adequate to provide the monthly maintenance
3. Specified Individuals in Nursing Facilities. For an individual who is aged,
blind, or has a disability and who is in a medical institution or nursing
facility but does not have a community spouse, the requirements established in
this section with respect to income limitations and treatment of income shall
In determining eligibility, the appropriate medically needy standard or special
income level, disregards, and exclusions from income shall be used.
In determining patient liability for the cost of institutional care, gross
income shall be used as provided in subsections (2) and (3) of this section.
Income protected for basic maintenance shall be forty (40) dollars monthly plus
Mandatory withholdings shall:
Include minimum state and federal taxes; and
Not include court-ordered child support, alimony, or similar payment resulting
from an action by the recipient.
An amount excluded under a plan to achieve self-support, as an impairment related
work expense, or a blind work expense (BWE) shall be considered an increased
personal needs allowance for a Medicaid recipient except a recipient for whom a
quarterly spenddown process as established in 907 KAR 20:020 is applicable.
Income in excess of the amount protected for basic maintenance shall be applied
to the cost of care except as provided in this subsection.
Available income in excess of the basic maintenance allowance shall be first
conserved as needed to provide for the needs of a minor child up to the
appropriate family size amount from the scale as established by 907 KAR 20:020,
Remaining available income shall be applied to the incurred costs of medical
and remedial care that are not subject to payment by a third party (except that
the incurred costs may be reimbursed under another public program of the state
or political subdivision of the state), including Medicare and health insurance
premiums or medical care recognized under state law but not covered under the
state's Medicaid plan.
The basic maintenance standard allowed an individual during the month of entrance
into or exit from the nursing facility shall take into account the home maintenance
If an individual loses eligibility for a supplementary payment due to entrance
into a participating nursing facility and the supplementary payment is not
discontinued on a timely basis, the amount of an overpayment shall be
considered as available income to offset the cost of care to the Medicaid Program.
An SSI benefit payment, mandatory state supplement payment, or optional state
supplement payment received by a specified institutionalized Medicaid eligible
individual in accordance with 42 U.S.C. 1382(e)(1)(G) shall be excluded from
consideration as either income or a resource.
The payment shall not be used in the posteligibility process to increase the
Ninety (90) dollars of Veterans Affairs benefits received by a veteran or the
spouse of a veteran shall be excluded from consideration as income.
The ninety (90) dollars shall not be counted in the eligibility or the
Veterans Affairs payments for unmet medical expenses and aid and attendance shall:
Be excluded in a Medicaid eligibility determination for a veteran or the spouse
of a veteran residing in a nursing facility;
Be excluded in the posteligibility determination for a veteran or the spouse of
a veteran residing in a nonstate-operated nursing facility; and
Not be excluded in the posteligibility determination process for a veteran or
the spouse of a veteran residing in a state-operated nursing facility.
Income placed in a qualifying income trust established in accordance with 42
U.S.C. 1396p(d)(4) and 907 KAR 20:030, Section 3(5), shall be counted in the
4. Special Needs Contributions for Institutionalized Individuals. (1) A
voluntary payment made by a relative or other party on behalf of a nursing
facility resident or patient shall not be considered as available income if
made to obtain a special privilege, service, or item not covered by the
A special service or item shall include television or telephone service,
private room or bath, or a private duty nursing service.
5. Applicability. (1) The provisions and requirements established in this
administrative regulation shall not apply to an individual whose Medicaid
eligibility is determined:
Using the modified adjusted gross income standard pursuant to 907 KAR 20:100;
Pursuant to 907 KAR 20:075.
Resources shall not be considered for eligibility purposes for an individual:
Whose Medicaid eligibility is determined using the modified adjusted gross
income standard pursuant to 907 KAR 20:100; or
Between the age of nineteen (19) and twenty-six (26) years:
Who formerly was in foster care;
Who aged out of foster care while receiving Medicaid coverage; and
For whom the Medicaid eligibility standards are established in 907 KAR 20:075. (23 Ky.R. 4035; Am. 24 Ky.R. 607; eff.
8-20-1997; 28 Ky.R. 970; 1417; eff. 12-19-2001; 30 Ky.R. 743; 1270; eff.
11-25-2003; 35 Ky.R. 1649; 2754; eff. 7-6-2009; TAm 7-16-2013; Recodified from 907 KAR 1:655,
9-30-2013; 40 Ky.R. 1178; 1782; 2166; eff. 4-4-2014.)