Increasing the CSRA Without Considering the Income of the Institutionalized Spouse

When an institutionalized spouse or a community spouse requests a state hearing to increase the CSRA, should the ALJ allocate the income of the institutionalized spouse in determining whether to increase the CSRA for the community spouse?

Under federal law, states may choose to require an institutionalized spouse to allocate income to the community spouse before an ALJ could increase the CSRA. The applicable statute is Welfare and Institutions Code (W&IC) §14006(c). That statute says, "A community spouse may retain nonexempt resources to the maximum extent permitted under Title XIX of the federal Social Security Act".

By implementing this statute, California has not chosen to be an "income first" state. This means that California has never required an institutionalized spouse to allocate income to a community spouse before either spouse requests a hearing to increase the CSRA for the community spouse. As a result, an ALJ should not allocate the income of the community spouse when the community spouse requests a hearing seeking to increase the CSRA.

The following example illustrates the issue:

The community spouse has $600 in Social Security benefits as her only source of income. She and the institutional spouse have $200,000 in bank accounts. They have no other property.

The county has denied Medi-Cal for the community spouse because the $200,000 exceeds the $84,120 CSRA. The community spouse requests a hearing to increase the CSRA.

At the hearing, the community spouse contends that at current interest rates for a six-month certificate of deposit, she could retain $275,000 in property. She maintains that it would take $275,000 to generate $1503 in monthly income which combined with her $600 Social Security income would equal the $2103 Minimum Monthly Maintenance Need Allowance (MMMNA) for 2000.

Assuming the community spouse has correctly established the current certificate of deposit rates, the ALJ should grant the claim and increase the CSRA to $275,000. The ALJ should not allocate any income of the institutionalized spouse to the community spouse in determining whether to increase the CSRA. Thus even if the institutionalized spouse had $2500 in income, none of this income could be allocated to the community spouse before Medi-Cal eligibility is established.

Once the CSRA is increased and Medi-Cal eligibility is established for the institutionalized spouse, the county would have to compute a share of cost for the institutionalized spouse. At this time, the institutionalized spouse could choose to allocate some of his income to the community spouse in order to reduce his share of cost.