A Center for Medicare and Medicaid Services (CMS) official says that the agency believes states now have 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.
In a recent e-mail exchange with CMS officials, North Caroliina attorney Robert Mason asked whether a community spouse's conveyance of assets post-eligibility would affect the institutionalized spouse's ongoing eligibility. Roy R. Trudel, a Technical Director at CMS's Centers for Medicaid and State Operations, replied that as a result of the U.S. Supreme Court’s decision in Wisconsin v. Blumer, 534 U.S. 473 (2002), states have the option of imposing a transfer penalty on the institutionalized spouse if the community spouse transfers protected resources after eligibility has been determined for the institutionalized spouse.
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. 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.
Trudel does not address attorney Mason's additional question of what effect, if any, the imposition of a penalty on an institutionalized spouse as a result of a post-eligibility transfer by the community spouse would have on the later potential eligibility of the community spouse.
Allowing states to sanction post-eligibilty transfers creates problems, especially in regard to possible double sanctions, and does not fit as neatly into the overall statutory scheme. That was a position CMS held for years. Prior to this, the CMS position was that the community spouse was free to do what it wanted with assets after the Institutionalized Spouse qualified for Medicaid. This new position draws into question the spouse's ability to make gifts to friends, family, or even to their church, for fear that it will result in a termination of benefits for their spouse.
