Several issues of the Elder Care Law Alert, have discussed various sections of the legislation that was HB 1500, then HB 1168 and has now become Act 42.  This article will discuss two additional sections:

441.7 - Income for the Community Spouse; and 441.8 Home and Community Services.

Selected Provisions of Act 42 that most directly affect seniors are available on this website at the following link: http://www.paelderlaw.com/pdf/selected_provsions.pdf  

Section 441.7: Income for the Community Spouse

Section 441.7 changes the methodology used to determine how the community spouse's minimum income allowance is funded.  The change targets community spouses who have incomes below federal minimum impoverishment standards.  

Before 1988, Medicaid rules often resulted in almost all of a married couple's income and savings being paid to the nursing home when one of them needed such care. This could leave the healthy "community" spouse with inadequate financial resources to pay for her necessities of life. 

As a result, Congress passed a law that required States to allow the healthy spouse to retain at least minimum amounts of income and savings.  These Medicaid provisions help ensure that community spouses are able to retain sufficient resources to live out their lives with a modicum of independence and dignity.

Act 42 changes the method by which the community spouse's protected income and resources are calculated so that the amount of savings that a low income community spouse can retain is greatly reduced.  It limits the amount of assets that a community spouse can own under the "resource-first" (Hurly) procedures.  

In addition, the new law forces the community spouse to overcome substantial administrative burdens to get this new, more limited, Hurly entitlement.  The community spouse must (1) apply for Medicaid at the right time, (2) receive a denial, (3) file an appeal from the denial, (4) enter into a stipulated agreement with the Department of Public Welfare (DPW), and (5) then purchase a special restricted annuity with part of the Spousal Share.  The annuity must name DPW as contingent beneficiary.

These requirements are going to be an enormous challenge for seniors, especially those who have physical or cognitive impairments.

Section 441.8: Eligibility for Home and Community-Based Services

Until now, the assets of the non-applicant spouse were disregarded in determining an individual's financial qualification for the Medicaid funded PDA 60+ Home Waiver program. Section 441.8 requires that the resources of the non-applicant community spouse be counted in the future.  Thus the financial qualification rules for home care are now similar to the rules for nursing facility care.

As a result of Section 441.8, many married individuals who are now receiving home care services under the Waiver program, will lose their benefits. The new law will also make it much more difficult for married individuals to qualify for Waiver services.  It is likely that the time between application and eligibility determination will also be extended even for those who do qualify.        

The enactment of Section 441.8 will greatly reduce the number of nursing facility clinically eligible married individuals who will be able to qualify for Medicaid financed home care. This may result in several potentially negative fiscal consequences for state funding of long term care services:

1.  State expenditures on home care services under the completely state-funded OPTIONS program will increase because that is a primary public financing alternative for individuals who fail to qualify for the mostly federally funded Medicaid Waiver programs. 

2.  Some individuals who could appropriately have received home care under Waiver will be forced into more costly nursing facilities.

Section 441.8 represents a curious policy decision by the state.

By reducing the incentives for home based care, and forcing some seniors into more expensive nursing homes this change is, at best, a two-edged financial sword.  The change could end up costing Pennsylvania more than it saves, especially since most of the Medicaid program savings are passed through to the federal government. 

Postponement or Repeal?

Act 42 will place significant new costs and burdens on Pennsylvania 's neediest low income seniors. Unfortunately, most of the additional dollars generated by these changes will not remain in Pennsylvania but will be passed along to the federal government. 

Act 42 was enacted as part of the recent rushed budget process, with little forethought by the State Legislature. Hopefully, given the policy considerations involved, the Legislature and Governor will take the time to review and then postpone the most ill-considered provisions of the new law.  

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