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U.S. SUPREME COURT RULES THAT “INCOME-FIRST RULE” IS PERMISSIBLE

On February 20, 2002, the United States Supreme Court ruled in Wisconsin Department of Health and Family Services vs. Blumer, 535 U.S. ___, that the State of Wisconsin’s use of the “income-first” method to bring a community spouse’s income up to the Minimum Monthly Maintenance Needs Allowance (“MMMNA”) (presently $2,232 in New York) does not conflict with the Medicare Catastrophic Coverage Act of 1988. This had been one of the most highly contested issues in Medicaid law and, in effect, permit States to continue to employ the “income first” methodology for Medicaid budgeting purposes.
New York has employed the “income first” methodology which was endorsed by the New York Court of Appeals in the Golf case.

The result of the decision keeps the status quo in New York but will be far-reaching due to its adverse impact on community spouses. If the court had held that the “income first” rule impermissibly conflicts with federal law, New York and other states would be forced to adopt the “resource first” approach which puts community spouses in a better financial situation. Presently, in New York community spouses (the “at home “ spouse” of an institutionalized spouse is allowed to keep monthly income of $2,232 and assets of $89,280. The “resource first” approach espouses that in the event a community spouse has monthly income of less than the MMMNA, the community spouse could keep resources over and above the Community Spouse Resource Allowance (“CSRA”) (presently a maximum of $89, 280 in New York) in order to earn enough extra income (i.e., interest and dividends) so as to bring the community spouse’s income up to the MMMNA. The “resource first” approach is preferred by community spouses over the “income first rule” as it would allow the community spouse to keep excess assets. Under the “income first” rule, if the institutionalized spouse dies first, the community spouse may suffer a loss of income and resulting financial hardship. As an example, consider an institutionalized spouse who has monthly income of $1,000 ($500 from Social Security and $500 from a pension) and a community spouse who has monthly income of $1,200 (Social Security) and assets of $200,000. Under the “income first rule”, the community spouse must first accept the institutionalized spouse’s monthly pension of $500 to bring his or her total monthly income up to $take an hadoes not have to worry about a loss of income which would result from

The decision can be found at www.supremecourtus.gov/opinions/01slipopinion.html.

Robert J. Kurre, attorney and counselor at law, offers legal services in the areas of Elder Law, Estate Planning and Estate Administration. He is the Vice Chair of the Elder Law, Social Services and Health Advocacy Committee of the Nassau County Bar Association. He is also a member of the National Academy of Elder Law Attorneys as well as the Elder Law and Trusts and Estates Sections of the New York State Bar Association. He is a published author, frequent lecturer, and instructor within his areas of practice.

This publication does not constitute the rendering of legal or other professional services by Robert J. Kurre, Esq. While extreme care is taken to present the material in an accurate fashion, Robert J. Kurre, Esq. disclaims any implied or actual warranties as to the accuracy of the material and any liability with respect thereto.