• Medical care can be expensive, but Medicaid provisions also protect the spouse still living at home.nursing duties image by Pix by Marti from Fotolia.com
  
  The Deficit Reduction Act of 2005 brought changes in rules for family income for a "community spouse" of someone living in a medical facility. The community spouse is the one still living in the community after a spouse has moved into such a facility. The federal rules are designed to prevent people from hiding resources to qualify for Medicaid help. At the same time, they seek to allow the community spouse a fair share of joint resources.
  
  

Spousal Impoverishment

• Congress acted in 1988 to deal with what it called spousal impoverishment, according to the Centers for Medicare and Medicaid Services website, under the Department of Health and Human Services. Provisions apply when a spouse is expected to be in a medical facility for at least 30 days. The couple's resources are combined for an assessment following a Medicaid application but then the spousal share is determined and a protected resource amount is set for the community spouse. That is subtracted from the joint amount and the remainder is used to determine eligibility for the spouse going into the facility. The two individuals are not considered a couple for eligibility purposes.
  
  

Deductions

• The income of the spouse in the medical facility can be reduced in determining Medicaid eligibility by a personal needs allowance, a monthly income allowance for the community spouse, a family income allowance if there are other family members in the home and an amount for medical expenses by the spouse in the medical facility. The community spouse's monthly allowance is determined by annual guidelines, but any amount of personal monthly income will be deducted from that amount. Once the deductions are set the remaining income is contributed to the cost of care for the institutionalized spouse and Medicaid coverage kicks in at the level set by guidelines.
  
  

Transfer of Assets

• The Deficit Reduction Act of 2005 created some new rules to discourage transfer of funds to gain Medicaid eligibility for long-term care services. The move was a response to efforts to protect assets for family members, making it difficult for families to use the money for the person placed in a health care facility. Provisions of the changes included lengthening to 60 months the "look-back" period in some cases where assets can be reviewed to determine if an improper transfer has taken place, penalty periods, treatment of annuities and excluding coverage for substantial home equity. Community spouse provisions are built into these guidelines based on the spousal impoverishment provisions.
  
  

Penalties

• The state is required to withhold payment for nursing facility care and certain other long-term care for periods of time if there are violations of the transfer guidelines based on fair market value. That penalty period is determined by dividing the value of the transferred asset by the average monthly private-pay rate for the nursing facility care in the state. The website of the Centers for Medicare & Medicaid Services cites an example of an asset valued at $90,000, divided by a $3,000 average monthly private-pay rate, which would result in a 30-month penalty period. There is no limit to the length of the penalty period.