To be eligible for Medicaid, an applicant’s income and resources must be below certain thresholds. Although spouses’ income and resources are generally considered jointly held and available to both, Congress has passed statutes allowing one spouse to maintain certain assets, including a monthly allowance, without those assets affecting the Medicaid eligibility of the other spouse. This monthly allowance is determined by statute but can be increased if one spouse has a court order of support from the other in an amount higher than the statutory amount.
Here, after the trial court granted Mary Weber guardianship over her incapacitated husband, Clarence Weber, she moved for and received an order for spousal support. This spousal-support order was then used to increase Mary’s allowance and offset Clarence’s income when he applied for Medicaid, which in turn increased the amount of Medicaid funding he received. Almost a year after the spousal-support order was issued, the Indiana Family and Social Services Administration (FSSA), the State’s Medicaid agency, moved to intervene and for relief from judgment, arguing the trial court’s spousal-support order was contrary to law. The trial court granted FSSA’s request to intervene but found it is not entitled to equitable relief.
FSSA now appeals, arguing the spousal-support order is erroneous and that it is entitled to relief from judgment. Mary cross-appeals, arguing the court erred in granting FSSA’s request to intervene. We conclude the trial court did not err in allowing FSSA to intervene, given its significant interest in the proceedings. And we agree with FSSA that Indiana’s spousal-support statute does not permit an award of support in Mary’s case and that extraordinary circumstances here warrant equitable relief. We therefore affirm in part and reverse and remand in part.
In response to this issue, Congress enacted the Medicare Catastrophic Coverage Act of 1988 (“the Act”). 42 U.S.C. § 1396r-5. The Act includes spousal impoverishment provisions which permit the community spouse to reserve certain income and assets to meet their needs while maintaining Medicaid eligibility for the institutionalized spouse. Blumer, 534 U.S. at 478. The provisions shelter from diminution a standard amount of assets, id., including a monthly allowance for the community spouse, referred to as the “minimum monthly needs maintenance allowance,” 42 U.S.C. § 1396r-5(d)(1)(B). If the community spouse’s monthly income is below the minimum monthly needs maintenance allowance, that shortfall—called the community spouse monthly income allowance—is “deducted” from the income of the institutionalized spouse and reallocated to the community spouse, reducing the amount of income that would otherwise be considered available for the institutionalized spouse’s care. Blumer, 534 U.S. at 481. As a result, Medicaid will pay a greater portion of the institutionalized spouse’s medical expenses. Id. at 482.
Although the Act sets the allowance at a certain amount, it also provides mechanisms through which a community spouse may increase their allowance. Under the Act, if a court has entered an order against an institutionalized spouse for monthly income for the support of the community spouse, the community spouse’s allowance “shall be not less than the amount of the monthly income so ordered.” 42 U.S.C. § 1396r-5(d)(5). Additionally, if either spouse establishes that “the community spouse needs income, above the level otherwise provided by the minimum monthly maintenance needs allowance, due to exceptional circumstances resulting in significant financial duress, there shall be substituted, for the [allowance] . . . an amount adequate to provide such additional income as is necessary.” Id. at (e)(2)(B). Similarly, Indiana’s Medicaid statutes provide that where an institutionalized spouse is eligible for Medicaid, and either spouse “establishes that a higher allowance is needed due to exceptional circumstances resulting in significant financial duress,” the allowance “may be increased after an administrative hearing or by a court order.” Ind. Code § 12-15-2-25.
Clarence and Mary married in 1965. In 2018, eighty-three-year-old Clarence began exhibiting poor mental health, including hoarding, paranoia, aggression, and memory loss. In February 2019, he underwent a psychiatric examination and was diagnosed with dementia, bipolar disorder, anxiety, and post-traumatic stress disorder. In May, Clarence was institutionalized in a nursing-care facility and Mary moved for temporary guardianship over his person and estate, which the court granted.
In August, Mary petitioned for spousal support in the guardianship case under Indiana Code section 31-16-14-1, which provides for spousal support between still-married spouses in certain situations. Mary alleged Clarence was incapacitated and “that exceptional circumstances exist which will result in significant financial duress for [Mary] unless the Court enters a spousal support order in [her] favor.” Appellant’s App. Vol. II p. 43. An “Agreed Stipulation For Spousal Support” was filed the same day, signed by Mary, Clarence (despite being under guardianship), and their respective attorneys, agreeing Mary should receive $3,800 a month from Clarence in spousal support. Id. at 51. On August 9, 2019, the court issued an order granting Mary $3,800 a month in spousal support, finding Clarence is incapacitated and “exceptional circumstances” exist requiring support. Id. at 63. Later that month, Clarence applied for Medicaid funding and included in his application the court’s spousal-support order. In November, FSSA issued Clarence an “Eligibility Notice of Action” stating its temporary approval of Clarence’s Medicaid eligibility.
In August 2020, FSSA moved to intervene in the guardianship proceedings and filed a motion for relief from judgment under Trial Rule 60(B). The trial court granted the motion to intervene, and a hearing was held on the motion for relief. At the hearing, Mary argued in part that “exceptional circumstances” support the order and cited for the first time Indiana Code section 12-15-2-25—the part of the Indiana Medicaid statutes providing that a community spouse’s allowance may be increased upon a showing of “exceptional circumstances”— notwithstanding that she had not brought her spousal-support petition or any other motion under that statute.
The trial court agreed with Mary and denied the motion for relief. Without reaching the merits of the spousal-support order, the court determined FSSA was not entitled to equitable relief because Indiana Code section 12-15-2-25(d) instructed FSSA to adopt rules “setting forth the manner in which the office will determine the existence of exceptional circumstances resulting in significant financial duress” and FSSA had yet to do so. Therefore, the court concluded an equitable remedy “should not be available to the FSSA due to their own failure to fully comply with their statutory obligation(s), such that this dispute might have been originally avoided by having their guidance.” Id. at 198.
FSSA argues it has a meritorious claim or defense because the trial court’s spousal-support order is contrary to law. We agree. The trial court granted Mary spousal support based on Indiana Code section 31-16-14-1(a)(3)…
This statute does not apply to the facts here. While, as Mary argues, Clarence is incapacitated, that is not all the statute requires. It states the other spouse—here Clarence—must become incapacitated because he is a “habitual drunkard.” And there is absolutely no evidence that Clarence is. Mary did not claim as much in her petition for spousal support nor did the trial court find as much in its order awarding support. Instead, the record makes clear Clarence is incapacitated as a result of his declining mental health. And the court’s finding of “exceptional circumstances” does not allow for an award of support under the statute. In fact, the term “exceptional circumstances” does not appear in Section 31-16-14-1 at all. Thus, we agree with FSSA that the trial court erred in granting Mary spousal support under Indiana Code section 31-16-14-1.
Despite the outcome of this appeal, we note Mary still has a remedy available to her. Before Clarence applied and was found eligible for Medicaid, Mary was not entitled to seek a community spouse allowance pursuant to Indiana Code Section 12-15-2-25, which only applies to spouses of institutionalized persons eligible for Medicaid. But Clarence was found eligible for Medicaid in November 2019, at which time both federal and state Medicaid law permit either Clarence or Mary to seek a Medicaid determination that Clarence is entitled to retain for Mary a community spouse income allowance higher than the minimum monthly needs allowance due to exceptional circumstances resulting in significant financial duress. See 42 U.S.C. § 1396r-5(d)(1)(B); I.C. § 12-15-2-25(b), (c). If they are dissatisfied with FSSA’s determination on that issue, they may appeal that determination through the administrative appeals process and/or the courts. See 42 U.S.C. § 1396r-5(e)(2) (allowing either spouse to obtain a fair hearing challenging the amount of the allowance); I.C. § 12-15- 2-25(c) (allowing either spouse to establish that a higher income allowance is needed); I.C. § 12-15-28 (regarding appeals and hearings in the Medicaid context).
This remedy is available to Mary and Clarence despite FSSA’s admitted failure to adopt rules “setting forth the manner in which the office will determine the existence of exceptional circumstances resulting in significant financial duress” as required under Indiana Code Section 12-15-2-25(d). Id. However, “[d]ue process requires that standards should be written with sufficient precision to give fair warning as to what the agency will consider in making its decision.” Leone v. Comm’r, Ind. Bureau of Motor Vehicles, 933 N.E.2d 1244, 1255 (Ind. 2010). Therefore, should the Webers be dissatisfied with FSSA’s determination of the amount of the community spouse monthly income allowance, they may have a due-process claim on appeal of that decision, since FSSA has no written standards at all regarding what it considers in determining the existence of exceptional circumstances resulting in significant financial duress.
Affirmed in part and reversed and remanded in part.
Riley, J., and Bailey, J., concur.