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Stealth Regulations

Pennsylvania Department of Public Welfare issued a “policy clarification” on June 27, 2011 pertaining to the sale of a person’s home when the person has a spouse who is receiving nursing care funded by Medicaid.  This policy unfairly restricts the amount of money the person can keep out of the sale and is contrary to federal law.  Further, it is not part of the Medicaid policy manual, but must be ferreted out by someone who is looking for it.  Intentionally or not, this policy clarification comes as a nasty surprise when a person sells his or her home, expecting to be able to use the funds for financial support.

Medicaid has a complicated financial eligibility structure for nursing home residents and persons who receive nursing care in community settings – such as in their own home or in an assisted living facility.  However, once Medicaid is approved for the spouse who is receiving nursing care, called the Institutionalized Spouse, the Community Spouse’s assets should not be considered.  This is clearly stated in federal law, which provides, “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 benefits under this subchapter, no resources of the community spouse shall be deemed available to the institutionalized spouse.”  42 USCA § 1396r-5(c)(4).  Compared to the Byzantine regulatory maze of most of the Social Security Act, this sentence is almost absurdly simple. The section of which it is a part is over 3,200 words.

Importantly, the operant language is only 14 words: no resources of the community spouse shall be deemed available to the institutionalized spouse.  Unlike most of § 1396r-5, there are no exceptions.  It says that “no resources shall be deemed available to the institutionalized spouse,” not “no resources shall be deemed available to the institutionalized spouse, except as provided in section (a) of subpart C of part R of chapter XXII,” or an exception to an exception to an exception.  No resources means no resources, yet Department of Public Welfare has carved out a major exception when the community spouse sells a home.

Policy Clarification, Medicaid - Long Term Care PMN15842440, provides that if the community spouse (CS) sells his or her home it could affect the eligibility for Medicaid of the institutionalized spouse’s (IS).  The directive reads as follows:

If the CS sells the property, the entire value of the property will be counted as a resource for the IS. It does not matter that the property was titled only in the name of the CS. When the property is sold, all of the proceeds are considered available to the IS except for the amount used to purchase a new residence. The purchase of the new residence should be within three months. Proceeds remaining after the purchase of the new residence may be transferred to the CS, but only up to the Community Spouse Resource Allowance figure.
If the residence was transferred, the entire uncompensated value is considered available to the IS (even if the name of the IS was never on title) and an applicable penalty period should be imposed.

It is disturbing and distressing when a government agency deliberately breaks the law.  As I observed in “Dreadful Michigan Medicaid Joint Tenancy Rules,” April 9, 2011, Michigan ignored state property law and the federal Social Security Act to prevent poor Medicaid applicants who are otherwise eligible from qualifying.

Like the Michigan Medicaid rule change, this Pennsylvania policy clarification is a flagrant violation of federal Medicaid law.  DPW figures it can get away with it because most Medicaid applicants and recipients do not have legal representation and those who have attorneys will still lack the money and the gall challenge the agency in court.  As it has done in the past, DPW issues policy it knows is contrary to federal law because it can get away with it.  It can take years to force DPW to stop trying to enforce illegal policy provisions.

Besides being unfair and illegal, the policy clarification is unavailable in the regular Medicaid policy handbooks and manuals.  In fact, important parts of the policy handbooks are out of print and not available on the Internet.  It is next to impossible for someone outside the agency to determine what Medicaid rules currently apply.  As bad as it is to create unfair rules, it is worse to make unfair rules and keep them secret.

Pennsylvania Medicaid owes it to Pennsylvanians to promulgate fair rules that comply with federal law and, furthermore, to make the rules readily available in a comprehensive set of policy handbooks or manuals so those who need Medical Assistance will be able to discern what they need to do to qualify for the program.

John Payne, Attorney
1800 Grindley Park Street, Suite 6
Dearborn, Michigan 48124
Come visit me at:
313.563.4900/fax 313.583.3100

Pittsburgh Office:
8135 Perry Highway
Pittsburgh, Pennsylvania 15237
800.220.7200/fax 412.364.2000


1800 Grindley Park Street, Suite 6
Dearborn, MI 48214
tel: 313.563.4900
fax: 313.583.3100
8135 Perry Highway
Pittsburgh, PA 15237

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