Geston v. Olson

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

This is a Medicaid eligibility case. Before the Court are cross-motions for summary judgment filed on August 22, 2011, and October 3, 2011, respectively. See Docket Nos. 10 and 13. A number of responsive pleadings were filed by both parties thereafter. See Docket No’s. 16, 20, 27, 31, and 34. Oral argument was held in Bismarck, North Dakota, on April 12, 2012.

I. BACKGROUND.

Plaintiff John Geston is a 73-year-old resident of the Missouri Slope Lutheran Care Center (Missouri Slope), a skilled nursing home facility located in Bismarck, North Dakota. He is considered the “institutionalized spouse” for Medicaid purposes. John Geston resided at Edgewood Vista Memory Care facility (Edgewood Vista) prior to moving to Missouri Slope. The cost of his care is $219.25 per day. See Docket No. 21-1. Plaintiff Carolyn Geston is married to John Geston. She lives in her home in Bismarck and is considered the “community spouse” for Medicaid purposes.

The defendant, Carol K. Olson, is the Executive Director of the North Dakota Department of Human Services (DHS). North Dakota has elected to participate in the Medicaid program and has designated DHS to implement the program. N.D.C.C. § 50-24.1-01.1. As Executive Director of DHS, Olson is responsible for the administration of the Medicaid program for the State of North Dakota. The Burleigh County Social Services Board acts under the direction and supervision of the *868DHS to administer the Medicaid program in Burleigh County, North Dakota.

John Geston entered Missouri Slope on April 19, 2011. His application for Medicaid benefits was filed with the Burleigh County Social Service Board on April 29, 2011. See Docket No. 15-1. An asset assessment was included with the application. See Docket No. 15-6. Eligibility rules limit the amount of assets or resources 1 a married couple may possess and still qualify for Medicaid. The asset limit for the “institutionalized spouse” is $3,000. The asset limit for the “community spouse” is $109,560. The asset assessment determined that the Geston’s total countable assets were $699,144.80. as of July 21, 2010, the date John Geston entered Edgewood Vista. See Docket No. 15-6. Subtracting the Geston’s combined asset allowance of $112,560 produced an excess asset calculation of $586,854.80.

Thus, it was necessary to spend down the assets if John Geston was to be eligible for Medicaid benefits. A new car and home were purchased along with prepaid burial services, all of which are considered to be exempt assets. Carolyn Geston also purchased an annuity. See Docket No. 11-1. The single premium annuity was purchased on November 24, 2010, from Employees Life Company (Mutual) for $400,000. The annuity had an effective date of December 6, 2010, and provides Carolyn Geston with monthly income of $2,734.65. The income of the “community spouse” is not taken into consideration in making a Medicaid eligibility determination for the “institutionalized spouse.” The annuity is irrevocable, unassignable, and nontransferable. The annuity has a benefit period of thirteen (13) years, which period is actuarially sound because it is less than Carolyn Geston’s life expectancy which is slightly more than thirteen years. The North Dakota Department of Human Services is named as the primary beneficiary in the first position for at least the total amount of Medicaid benefits paid on behalf of the Gestons.

The record reveals that John Geston applied for Medicaid benefits on April 29, 2011. See Docket No. 21-1. The Medicaid application was denied on June 8, 2011. See Docket No. 11-2. The basis for denial was that the Gestons’ countable assets, which were calculated at $454,691.33, exceeded the $112,560 maximum. The annuity was valued at $383,592.10 which represented the purchase price minus the annuity payments already made. Carolyn Geston’s annuity failed to meet the criteria set forth in N.D.C.C. § 50-24.1-02.8(7)(b) and the annuity was determined to be a countable asset. If the corpus of Carolyn Geston’s annuity was not treated as a countable asset, John Geston would be eligible for Medicaid benefits.

This action was commenced in' federal court on May 13, 2011. See Docket No. 1. The action is brought pursuant to 42 U.S.C. § 1983 and the Supremacy Clause. U.S. Const, art. VI. para. 2. The Gestons seek injunctive and declaratory relief declaring N.D.C.C. § 50-24.1-02.8(7) invalid and preempted by federal law because it is more restrictive than federal law and impermissibly allows DHS to consider a community spouse’s income in determining an institutionalized spouse’s Medicaid eligibility. The Court has federal question jurisdiction as the primary issue is whether the *869federal Medicaid Act has been violated. See 28 U.S.C. § 1331.

II. STANDARD OF REVIEW.

Summary judgment is appropriate when the evidence, viewed in a light most favorable to the non-moving party, indicates that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. Davison v. City of Minneapolis, Minn., 490 F.3d 648, 654 (8th Cir.2007); see Fed.R.Civ.P. 56(c). Summary judgment is not appropriate if there are factual disputes that may affect the outcome of the case under the applicable substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue of material fact is genuine if the evidence would allow a reasonable jury to return a verdict for the non-moving party. Id.

The Court must inquire whether the evidence presents a sufficient disagreement to require the submission of the case to a jury or whether the evidence is so one-sided that one party must prevail as a matter of law. Diesel Mach., Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir.2005). The moving party bears the burden of demonstrating an absence of a genuine issue of material fact. Simpson v. Des Moines Water Works, 425 F.3d 538, 541 (8th Cir.2005). The non-moving party “may not rely merely on allegations or denials in its own pleading; rather, its response must ... set out specific facts showing a genuine issue for trial.” Fed. R.Civ.P. 56(e)(2). The court must consider the substantive standard of proof when ruling on a motion for summary judgment. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

There are no material facts in dispute in this case and only questions of law remain. The parties agree summary judgment is appropriate.

III. LEGAL DISCUSSION.

A. PRIVATE CAUSE OF ACTION UNDER 42 U.S.C. § 1983.

Before proceeding to the merits of the action it is necessary to determine whether the statutory provisions at issue provide the Gestons a private cause of action under 42 U.S.C. § 1983. The Gestons contend the North Dakota rules and regulations for Medicaid eligibility are in direct conflict with federal Medicaid law. Specifically, they argue that N.D.C.C. § 50-24.1-02.8(7)(b) adds requirements not authorized by Congress which conflict with 42 U.S.C. §§ 1396a(a)(10)(C)(i), 1396a(a)(17), 1396a(r)(2)(B) and 1396r — 5(b)(1). Section 50-24.1-02.8(7)(b) of the North Dakota Century Code uses a formula which treats some annuities as an asset which results in John Geston being ineligible for Medicaid benefits. DHS contends the Medicaid provisions cited by the Gestons do not provide a private cause of action under 42 U.S.C. § 1983.

42 U.S.C. § 1983 provides a private cause of action for the “deprivation of any rights, privileges, or immunities secured by the Constitution and laws” of the United States. 42 U.S.C. § 1983. Section 1983 actions may be brought against state actors to enforce rights created by federal statutes or the Constitution. Gonzaga Univ. v. Doe, 536 U.S. 273, 279, 122 S.Ct. 2268, 153 L.Ed.2d 309 (2002). A plaintiff seeking 42 U.S.C. § 1983 redress “must assert the violation of a federal right, not merely a violation of federal law.” Blessing v. Freestone, 520 U.S. 329, 340, 117 S.Ct. 1353, 137 L.Ed.2d 569 (1997) (citing Golden State Transit Corp. v. City of Los Angeles, 493 U.S. 103, 106, 110 S.Ct. 444, 107 L.Ed.2d 420 (1989)) (emphases in original). The United States Supreme Court looks at three factors in deciding whether a particular statutory provision, enacted pursuant to Congress’s spending power, *870creates a private right of action under 42 U.S.C. § 1983; (1) Congress intended the provision to benefit the plaintiff; (2) the right asserted is not so “vague and amorphous” that its enforcement would strain judicial competence; and (3) the provision clearly imposes a binding obligation on the States. Center for Special Needs Trust Admin., Inc. v. Olson, 676 F.3d 688, 698-99 (8th Cir.2012); Lankford v. Sherman, 451 F.3d 496, 508 (8th Cir.2006). “If the legislation meets this test, there is a presumption it is enforceable under section 1983.” Lankford, 451 F.3d at 508 (citing Blessing, 520 U.S. at 341, 117 S.Ct. 1353). If the legislation meets the three Blessing prongs, it is presumed enforceable under Section 1983. The presumption is rebutted if Congress explicitly or implicitly forecloses enforcement under Section 1983. However, the availability of administrative remedies alone cannot defeat the plaintiffs ability to invoke Section 1983. Lankford, 451 F.3d at 508. Congress has created no such enforcement scheme for Medicaid disputes, and DHS does not contend that Congress has done so. See Ark. Med. Soc’y, Inc. v. Reynolds, 6 F.3d 519, 528 (8th Cir.1993) (citing Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 520-23, 110 S.Ct. 2510, 110 L.Ed.2d 455 (1990)).

1. 42 U.S.C. § 1396a(a)(17).

One of the statutory provisions relied upon by the Gestons is 42 U.S.C. § 1396a(a)(17). This provision states as follows:

A state Medicaid plan must “include reasonable standards ... for determining eligibility for and the extent of medical assistance under this plan.”

42 U.S.C. § 1396a(a)(17). In Lankford, the Eighth Circuit Court of Appeals found the statutory language that required state plans to include reasonable standards for determining eligibility in 42 U.S.C. § 1396a(a)(17) “insufficient to evince a congressional intent to create individually-enforceable federal rights.” Id. at 509. The Ninth and Tenth Circuits have also found that 42 U.S.C. § 1396a(a)(17) does not create a private cause of action under 42 U.S.C. § 1983. Watson v. Weeks, 436 F.3d 1152, 1162-63 (9th Cir.2006) (finding 42 U.S.C. § 1396a(a)(17) fails the first prong of the Blessing test as it fails to even mention persons or individuals); Hobbs v. Zenderman, 579 F.3d 1171, 1182-83 (10th Cir.2009) (finding no individual entitlement). The Court finds that the Gestons do not have a private cause of action under 42 U.S.C. § 1396a(a)(17).

2. 42 U.S.C. §§ 1396a(a)(10)(C)(i) and 1396a(r)(2)(B).

The Gestons also rely on 42 U.S.C. §§ 1396a(a)(10)(C)(i) and 1396a(r)(2)(B). These statutory provisions must be read together as 42 U.S.C. § 1396a(r)(2)(B) defines the controlling phrase “no more restrictive.” The statutes provide as follows:

[T]he plan must include a description of (I) the criteria for determining eligibility of individuals in the group for such medical assistance, (II) the amount, duration, and scope of medical assistance made available to individuals in the group, and (III) the single standard to be employed in determining income and resource eligibility for all such groups, and the methodology to be employed in determining such eligibility, which shall be no more restrictive than the methodology which would be employed under the supplemental security income program in the case of groups consisting of aged, blind, or disabled individuals in a State in which such program is in effect, and which shall be no more restrictive than the methodology which would be employed under the appropriate State plan (described in subparagraph (A)(i)) to which such group is most closely categorically related in the case of other groups;

*87142 U.S.C. § 1396a(a)(10)(C)(i) (emphasis added).

For purposes of this subsection and subsection (a)(10) of this section, methodology is considered to be “no more restrictive ” if, using the methodology, additional individuals may be eligible for medical assistance and no individuals who are otherwise eligible are made ineligible for such assistance.

42 U.S.C. § 1396a(r)(2)(B).

On their face these statutory provisions are phrased in terms of “individuals” and require state plans to adopt an eligibility methodology which is no more restrictive than that employed under the supplemental security income program. A statute must focus on an individual entitlement in order to satisfy the first prong of the Blessing test. Lankford, 451 F.3d at 508. The focus of these statutory provisions is eligibility criteria for “individuals.” 42 U.S.C. § 1396a(a)(10)(C)(i). Tellingly, the definition of “no more restrictive” twice speaks of individuals. 42 U.S.C. § 1396a(r)(2)(B). Section 1396a(r)(2)(B) permits adoption of an eligibility methodology which makes “additional individuals” eligible for medical assistance and forbids a methodology which results in otherwise eligible “individuals” being made ineligible. The failure to make any reference to individuals or persons was the fatal flaw that led to the conclusion that 42 U.S.C. § 1396a(a)(17) did not confer a private cause of action. Lankford, 451 F.3d at 509; Watson, 436 F.3d at 1162. However, the statutory provisions under consideration here clearly reveal an intent to benefit individuals such as the Gestons. See Markva v. Haveman, 168 F.Supp.2d 695, 711-12 (E.D.Mich.2001) (finding 42 U.S.C. § 1396a(a)(10)(C)(i) benefits individuals and provides a private right of action).

DHS relies on Hobbs v. Zenderman, 579 F.3d 1171, 1181-82 (10th Cir.2009) (concluding 42 U.S.C. § 1396a(a)(10)(C)(i) does not provide a private right of action). In Hobbs, the Tenth Circuit Court of Appeals construed 42 U.S.C. § 1396a(a)(10)(C)(i) in conjunction with 42 U.S.C. § 1396a(a)(17) and found the first prong of the Blessing test had not been met. Hobbs, 579 F.3d at 1181. The Court explained the references to individuals were tangential or passing references which did not provide the necessary rights-creating language.

The Court finds Hobbs unpersuasive. As the Court reads the statutory provisions in question, individuals are the focus. When a provision provides for the needs of a particular person, an individual right has been created. Gonzaga Univ., 536 U.S. at 288, 122 S.Ct. 2268. The statutory provisions in question speak to establishing “criteria for determining eligibility for individuals in the group” and assuring no individuals otherwise eligible are made ineligible. 42 U.S.C. §§ 1396a(a)(10)(C)(i) and 1396a(r)(2)(B) (emphasis added). Such references are not tangential. This Court’s interpretation is consistent with the Ninth Circuit’s finding in Watson that the operative phrase “ ‘[a] State plan ... must provide for making medical assistance available ... to all individuals.’ ” “unmistakably focused on the specific individuals benefitted,” and thus satisfied the first prong of the Blessing test. Watson, 436 F.3d at 1160, (finding a private right of action under 42 U.S.C. § 1396a(a)(10)).

The second prong of the Blessing test asks whether the asserted right is “so vague and amorphous” as to be beyond the competence of the judiciary to enforce. Lankford, 451 F.3d at 508. The statutory provisions in question here are neither vague nor amorphous, and they provide an objective standard, no more restrictive, which is capable of judicial construction. See Watson, 436 F.3d at 1161. Statutory provisions which call for reasonable standards or substantial compliance have been *872rejected while those that are expressed in terms of objective standards have been approved. Blessing, 520 U.S. at 343, 117 S.Ct. 1353 (rejecting substantial compliance); Lankford, 451 F.3d at 509 (rejecting reasonable standards); Watson, 436 F.3d at 1161 (approving objective standards). Whether a state plan applies eligibility criteria which results in individuals who are otherwise eligible being made ineligible will be readily apparent. Such an objective standard cannot be said to be vague or amorphous. As such, the second prong of the Blessing test is met.

Finally, the third prong under the Blessing test is whether the statutory provisions unambiguously impose a binding obligation on the states. Lankford, 451 F.3d at 508. “In other words, the provision giving rise to the asserted right must be couched in mandatory, rather than precatory, terms.” Blessing, 520 U.S. at 341, 117 S.Ct. 1353. 42 U.S.C. § 1396a(a)(10)(C)(i) begins by stating “the plan must ” and then describing the eligibility requirements including the command that the methodology to be employed “shall be no more restrictive.” 42 U.S.C. § 1396a(a)(10)(C)(i) (emphasis added). “42 U.S.C. § 1396a(r)(2)(B) requires that “no individuals” other wise eligible may be made ineligible”. This language is mandatory and the third prong of the Blessing test has been satisfied. In summary, the Gestons meet the three-part Blessing test for a private right of action under 42 U.S.C. § 1983.

3. 42 U.S.C. § 1396r-5(b)(l).

The final statutory provisions relied upon by the Gestons is 42 U.S.C. § 1396r-5(b)(l). This statute provides as follows:

(b) Rules for treatment of income

(1) Separate treatment of income

During any month in which an institutionalized spouse is in the institution, except as provided in paragraph (2), no income of the community spouse shall be deemed available to the institutionalized spouse.

42 U.S.C. § 1396r-5(b)(l).

The Court finds that 42 U.S.C. § 1396r-5(b)(l) also passes the three-prong Blessing test. This statutory provision is phrased in terms of the individual benefitted: the “community spouse.” The statute provides “no income of the community spouse shall be deemed available to the institutionalized spouse.” 42 U.S.C. § 1396r-5(b)(l). The focus on the individual is unmistakable. It is to be expected as Congress enacted 42 U.S.C. § 1396r as part of the Medicaid Catastrophic Care Act in an attempt to prevent the pauperization of the community spouse. Blumer, 534 U.S. at 477, 122 S.Ct. 962; Vieth v. Ohio Dept. of Job & Family Servs., No. 08AP-635, 2009 WL 2331870, at *3 (Ohio Ct.App. July 30, 2009). Second, the right not to have income deemed available to the “institutionalized spouse” provides a straightforward objective standard capable of judicial enforcement. Either the plan in question deems income available to the “institutionalized spouse” or it does not. Finally, the provision uses the mandatory language “no income” and “shall” and these terms provide no discretion to the states. The three-part Blessing test for a private right of action under 42 U.S.C. § 1983 has been met. Because the Blessing test is met and Congress has not foreclosed Section 1983 enforcement under the Medicaid Act, the Gestons have a private cause of action under 42 U.S.C. § 1983. The Court concludes that 42 U.S.C. § 1396r — 5(b)(1) provides for a private cause of action.

B. SUPREMACY CLAUSE.

In the second claim the Gestons set forth the same argument as asserted in *873their civil rights claim under 42 U.S.C. § 1983, but do so under the Supremacy Clause. U.S. Const, art. VI. para. 2. The Gestons contend that Section 50-24.1-02.8(7)(b) of the North Dakota Century Code is preempted by the Supremacy Clause because it is in direct conflict with the Medicaid Act.

The Supremacy Clause, while not the source of any federal rights, protects federal rights by giving them priority when they conflict with state laws. Lankford, 451 F.3d at 509; Weatherbee v. Richman, 595 F.Supp.2d 607, 617 (W.D.Pa.2009). The Supremacy Clause prohibits states from establishing eligibility rules for federal assistance programs that conflict with federal statutes and rules. Jackson v. Rapps, 947 F.2d 332, 336 (8th Cir.1992). When a state receives Medicaid matching funds it must comply with all federal regulations and statutes. Lankford, 451 F.3d at 510.

Under the preemption doctrine, state laws that “interfere with, or are contrary to the laws of congress, made in pursuance of the constitution” are preempted. Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 604, 111 S.Ct. 2476, 115 L.Ed.2d 532 (1991), quoting Gibbons v. Ogden, 9 Wheat. 1, 22 U.S. 1, 9, 6 L.Ed. 23 (1824). Where Congress has not expressly preempted or entirely displaced state regulation in a specific field, as with the Medicaid Act, “state law is preempted to the extent that it actually conflicts with federal law.” Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 203-04, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983). An actual conflict arises where compliance with both state and federal law is a “physical impossibility,” or where the state law “ ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ” Id., quoting Fla. Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963) and Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941). While Medicaid is a system of cooperative federalism, the same analysis applies; once the state voluntarily accepts the conditions imposed by Congress, the Supremacy Clause obliges it to comply with federal requirements. See Jackson v. Rapps, 947 F.2d 332, 336 (8th Cir.1991) (applying conflict preemption doctrine to state AFDC law, analogous to Medicaid’s system of cooperative federalism). See also King v. Smith, 392 U.S. 309, 316, 326-27, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968); Planned Parenthood of Houston & Se. Tex. v. Sanchez, 403 F.3d 324, 337 (5th Cir.2005) (“once a state has accepted federal funds, it is bound by the strings that accompany them”).

Lankford, 451 F.3d at 509-10. The Court finds that the Gestons have stated a valid Supremacy Clause claim.

C. MEDICAID OVERVIEW.

The Medicaid program, enacted as Title XIX to the Social Security Act, was created by Congress in 1965 as a cooperative federal-state program designed to furnish medical assistance to persons “whose income and resources are insufficient to meet the costs of necessary medical services.” 42 U.S.C. § 1396. The Medicaid Act, 42 U.S.C. §§ 1396-1396v, “is a federal aid program designed to help the states provide medical assistance to financially-needy individuals, with the assistance of federal funding.” Lankford v. Sherman, 451 F.3d 496, 504 (8th Cir.2006). The administration of the Medicaid Act is entrusted to the Secretary of the United States Department of Health and Human Services who in turn exercises its authority through the Centers for Medicare and Medicaid Services (CMS), formerly known *874as the Health Care Financing Administration (HCFA). Wisc. Dept. of Health and Family Servs. v. Blumer, 534 U.S. 473, 479 n. 1, 122 S.Ct. 962, 151 L.Ed.2d 935 (2002). While states are not required to participate in Medicaid, all of them do. Ark. Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006). Once a state chooses to participate in the Medicaid program it must comply with the federal statutory and regulatory scheme. Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 65 L.Ed.2d 784 (1980); Lankford, 451 F.3d at 504. Participating states must establish a plan to implement the program. 42 U.S.C. § 1396a. State plans must be approved by CMS. 42 U.S.C. § 1396a; 42 C.F.R. § 430.10. State Medicaid plans must comply with numerous prerequisites. 42 U.S.C. § 1396a(a)(l)-(65). In formulating a plan, states may consider only such income and assets as are determined by rules prescribed by the Department of Health and Human Services available to the applicant. Blumer, 534 U.S. at 473, 122 S.Ct. 962. Failure to conform with federal laws and regulations may result in a state’s loss of federal aid for its Medicaid program. 42 U.S.C. § 1396c.

Medicaid eligibility rules limit the amount of assets or resources a married couple may possess and still qualify for Medicaid. When both spouses live together in the community their income and assets are considered available to one another. When one spouse enters a nursing home the rules become more complex. See Johnson v. Guhl, 91 F.Supp.2d 754, 760 (D.N.J.2000). The allocation of income and resources between the “community spouse” and the “institutionalized spouse” are addressed in the Medicare Catastrophic Care Act of 1988. 42 U.S.C. § 1396r-5. The purpose of the Act was to protect the “community spouse” from pauperization while preventing financially-secure couples from obtaining Medicaid benefits. Blumer, 534 U.S. at 480, 122 S.Ct. 962. To accomplish this purpose, Congress and the Secretary have established a very complex set of laws and regulations which states must comply with in allocating a married couple’s income and assets. Id.

1. Medicaid Income and Resource Limits for “Community Spouses.”

42 U.S.C. § 1396r-5 (enacted in 1988) addresses the allocation of income and resources between spouses when one spouse applies for Medicaid because he requires long-term institutional care, while the other spouse continues to reside in the community. As described below, the assets of both spouses are considered in determining eligibility, regardless of who holds title; only the institutionalized spouse’s income is considered; the income of the “community spouse” is not considered; and the “community spouse” is allowed to keep the couple’s home, one automobile, personal items, and certain other forms of property. 42 U.S.C. §§ 1382b(a) and 1396r-5(c)(5).

The institutionalized spouse is expected to spend down his assets and income to defray the costs of his care. To prevent impoverishment of the community spouse, the Medicaid statute allows the community spouse to retain liquid assets or “resources,” up to a certain threshold, also known as the “Community Spouse Resource Allowance” (CSRA). 42 U.S.C. § 1396r-5(f)(2)(A). The law also allows the community spouse to receive an allowance from the income of the institutionalized spouse, known as the “minimum monthly maintenance needs allowance,” if the community spouse’s own income is below a certain threshold. Id. 42 U.S.C. § 1396r-5(d)(l), (2).

Liquid assets and other countable “resources” of the two spouses, measured at the time the institutionalized spouse is institutionalized, are divided equally between *875the spouses. 42 U.S.C. § 1396r-5(c)(l)(A)(ii). This division is used to calculate the CSRA. Id. 42 U.S.C. § 1396r-5(f)(2). At the time of application for Medicaid, all of the couple’s resources are considered available to the institutionalized spouse, minus $1600 for the institutionalized spouse, and minus the CSRA for the community spouse as established by each state. Id. 42 U.S.C. § 1396r-5(c)(2)(B). Once the institutionalized spouse’s eligibility has been established, the resources of the community spouse are no longer considered available to the institutionalized spouse. Id. 42 U.S.C. § 1396r-5(c)(4).

The Medicaid statute treats the community spouse’s income differently from resources. If a community spouse receives income in her own name, it is not considered to be available to the institutionalized spouse and, therefore, is not considered for purposes of determining his eligibility. 42 U.S.C. § 1396r — 5(b)(1), (2)(A)(I).

Asset allocation is governed by 42 U.S.C. § 1396r-5(c) and (f). Assets are valued as of the date of continuous institutionalization rather than the date of application. 42 U.S.C. § 1396r-5(c)(l)(B). Because of this, married couples are often advised to request a Medicaid valuation of their assets as soon as one of them enters a nursing home, even if they know they will not qualify until they spend down their assets. Frolick and Brown, Advising the Elderly or Disabled Client, ¶ 14.03[4] (2nd ed.2011). It is easier to value assets contemporaneously rather than to reconstruct values for a date several months or years in the past. One-half of the total assets is allocated to each spouse and is known as the spousal share. 42 U.S.C. § 1396r-5(e)(l)(A)(ii). An applicant may transfer assets to his or her spouse so long as the transfer is solely for the spouse’s benefit. 42 U.S.C. § 1396p(c)(2)(B)(I).

The institutionalized spouse is permitted a personal allowance of $3,000. 20 C.F.R. § 416.1205. The community spouse is permitted to retain assets up to a certain threshold set by the state. 42 U.S.C. § 1396r-5(f)(2)(A). In this case, the parties agree the CSRA is $109,560. The institutionalized spouse becomes eligible for Medicaid once the couple’s assets fall below the combined total of the personal allowance and the CSRA. It is undisputed in this case that this amount is $112,560 Another perspective is that all assets above the combined total of the CSRA and the institutionalized spouse’s personal allowance must be spent before eligibility is achieved. Blumer, 534 U.S. at 483, 122 S.Ct. 962.

One common strategy for dealing with excess assets is for the community spouse to purchase an annuity. Frolick and Brown, Advising the Elderly or Disabled Client, ¶ 13.06 (2nd ed.2011). Congress made significant changes to the Medicaid rules relating