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CMS Clarifies that State Medicaid Agencies Have Ability to Protect Same-Sex Couples

June 10, 2011

Authors: Joan W. Feldman, Vincenzo Carannante, William J. Roberts

On June 10, 2011, despite the fact that federal law prohibits recognition of same-sex relationships, the Centers for Medicare & Medicaid Services ("CMS") issued a letter to state Medicaid Directors clarifying that states are able to offer same-sex couples many of the same financial and asset protections available to opposite-sex couples when a partner is entering a nursing home or care facility.  This CMS letter offers states guidance with respect to the application of Medicaid liens, transfers of assets restrictions and estate recoveries for same-sex couples. A copy of the letter is available here.

The following sets forth the areas in which states may be flexible in protecting same-sex couples.

  • Liens: States enjoy discretion in determining when to pursue liens against a beneficiary’s home and, per this letter, may adopt a policy or rule not to pursue liens when the same-sex spouse or partner of the Medicaid beneficiary continues to reside lawfully in the home.

  • Transfer of Assets: Medicaid requires states to adopt provisions regarding the transfer of assets by an institutionalized individual for less than fair market value.  Penalties for improperly transferring assets do not apply if a beneficiary transfers assets to, or for the benefit of, a spouse or if the penalties would create undue hardship.  While federal law prohibits application of the spousal exception to same-sex couples, CMS indicates that states may adopt criteria or presumptions recognizing that imposing transfer of asset penalties on the basis of the transfer of ownership interests in a shared home to a same-sex spouse or domestic partner would constitute undue hardship.

  • Estate Recovery: States are required to pursue estate recoveries from a beneficiary in certain instances, except when there is a surviving spouse, surviving child under the age of 21, or the recovery would create undue hardship on the beneficiary’s heirs.  States have discretion to determine when undue hardship exists and CMS notes that states may adopt criteria or rules for when the undue hardship exception is to be used or who may be afforded the protection, such as same-sex couples.

This letter follows up on other recent steps taken by CMS and the Department of Health and Human Services to protect same-sex couples, including issuing patient visitation guidelines for hospitals.  For information regarding patient visitation and a sample policy, please click here.

While CMS has, in effect, given states a green light to implicitly recognize same-sex couples, we can expect that there will be significant discourse about this letter, with some questioning whether CMS has exceeded its agency authority.

If you have any questions regarding this CMS letter or other Medicaid issues, please feel free to contact a member of our Health Law Practice Group.

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