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The spousal impoverishment provisions of the Medicare Catastrophic Coverage Act of 1988 (MCCA) permit a spouse living at home to reserve certain income and assets to meet the minimum monthly maintenance needs he or she will have when the other spouse is institutionalized, usually in a nursing home, and becomes eligible for Medicaid. The MCCA's resource allocation rules provide that, in determining the institutionalized spouse's Medicaid eligibility, a portion of the couple's resources, called the "community spouse resource allowance" (CSRA), shall be reserved for the benefit of the community spouse. The MCCA allows an increase in the standard allowance if either spouse shows, at a state-administered hearing, that the community spouse will not be able to maintain the statutorily defined minimum level of income on which to live after the institutionalized spouse gains Medicaid eligibility. In 1996, after entering a Wisconsin nursing home, Irene Blumer applied for Medicaid through her husband Burnett and ultimately sought a higher CSRA. Under the "income- first" method for determining whether the community spouse is entitled to a higher CSRA, which Wisconsin uses, the State considers first whether potential income transfers from the institutionalized spouse will suffice to enable the community spouse to meet monthly needs once the institutionalized spouse qualifies for Medicaid. Subsequently, an examiner denied Blumer's request. The Court of Appeals affirmed, but the Wisconsin Court of Appeals reversed, concluding that the State's income-first statute conflicted with the MCCA, which, the appeals court held, unambiguously mandates the resources-first method.

Is the income-first method of determining whether a community spouse is entitled to a higher community spouse resource allowance consistent with the Medicare Catastrophic Coverage Act of 1988?

Yes. In a 6-3 opinion delivered by Justice Ruth Bader Ginsburg, the Court held that the income-first method qualified as a permissible interpretation of the MCCA. The Court reasoned that neither the text not the structure of the MCCA barred Wisconsin's use of the income-first method. Among the Court's findings were that that income-first method did not render meaningless the MCCA's key prohibition against deeming income of the community spouse available to the institutionalized spouse and that the Secretary of Health and Human Services, who possessed the authority to prescribe standards relevant to the issue at hand, had declared in a proposed rule that the Federal Government ought to leave to states the decision whether to use the income-first method or the resources-first method. Justice John Paul Stevens, joined by Justices Sandra Day O'Connor and Antonin Scalia, dissented.