Herweg v. Ray, 80-60

• Citation: 455 U.S. 265,102 S.Ct. 1059,71 L.Ed.2d 137
• Decision Date: 13 January 1982
• Docket Number: No. 80-60,80-60
• Parties: Elvina M. HERWEG, by her Husband and Next Friend, Darrell E. Herweg and Darrell E. Herweg, etc., Petitioners, v. Robert D. RAY, Governor of Iowa, et al
• Court: United States Supreme Court

455 U.S. 265

102 S.Ct. 1059

71 L.Ed.2d 137

Elvina M. HERWEG, by her Husband and Next Friend, Darrell E. Herweg and Darrell E. Herweg, etc., Petitioners,

v Robert D. RAY, Governor of Iowa, et al.

No. 80-60.

Jan. 13, 1982.

Decided Feb. 23, 1982.

Syllabus

Section 1902(a)(17)(D) of the Social Security Act (Act) provides that, in calculating benefits, state Medicaid plans must not "take into account the financial responsibility of any individual for any applicant or recipient under the plan unless such applicant or recipient is such individual's spouse." Section 1902(a)(17)(B) provides that participating States must grant benefits to eligible individuals "taking into account only such income and resources as are, as determined in accordance with standards prescribed by the Secretary [of Health and Human Services (HHS) ], available to the applicant or recipient." Section 1902(a)(10)(A) requires States that have not exercised the so-called § 209(b) option, to provide Medicaid assistance to all recipients of benefits under the Supplemental Security Income for the Aged, Blind, and Disabled (SSI) program. A federal regulation governing the "optional categorically needy" provides that if only one spouse is eligible for Medicaid, the States must "deem" income of the other spouse, i.e., consider the latter's income as "available" to the Medicaid applicant, for one month after the spouses cease to live together, following which period only the income actually contributed may be considered. After petitioner wife, as a result of cerebral hemorrhages, was placed in a long-term care facility in Iowa, which has not exercised the § 209(b) option, her petitioner husband applied for Medicaid assistance on her behalf. She is part of the optional categorically needy since she is eligible for, but does not receive, SSI benefits. Iowa, in calculating the wife's Medicaid benefits, "deemed" or attributed income earned by the husband to the wife in a manner inconsistent with the federal regulation. Petitioners then filed suit in Federal District Court, challenging Iowa's "deeming" of the husband's income. After certifying a class of plaintiffs which included SSI recipients as well as the optional categorically needy, the District Court held that § 1902(a)(17) required Iowa's procedures to "provide for a factual determination in each instance of the amount of the spouse's income which is in fact reasonably available for the support of the institutionalized spouse," and that the federal time-limitation regulation was inconsistent with § 1902(a)(17), because it disabled the States in certain instances from considering the spouse's income as available to the applicant. In response to this order, Iowa adopted a procedure for making individualized factual determinations of the amount of income available to an institu- tionalized spouse, and the District Court approved the plan. On petitioners' appeal, the Court of Appeals affirmed.

Held:

1. With regard to SSI recipients, the District Court's order conflicts with § 1902(a)(10)(A) of the Act, because it permits Iowa to deny Medicaid benefits to SSI recipients. To the extent that the order forbids "deeming" under any circumstances, it conflicts with the holding in Schweiker v. Gray Panthers, 453 U.S. 34, 101 S.Ct. 2633, 69 L.Ed.2d 460, that Congress intended to permit a state Medicaid plan to deem the income from the applicant's spouse as part of the available income that the state plan may consider in determining eligibility. Pp. 272-273.

2. Section 1902(a)(17)(D) does not preclude the Secretary of HHS from promulgating regulations that impose time limitations upon the States' ability to "deem" income between spouses who do not share the same household. In imposing such time limitations, the Secretary has done nothing more than define what income is "available," pursuant to § 1902(a)(17)(B). There is nothing in § 1902(a)(17)(D) that precludes the Secretary from imposing these limitations or that either disables him from defining the term "available" in circumstances where the applicant and spouse no longer live together or gives the States authority to "deem" income unimpeded by the Secretary's broad authority under § 1902(a)(17)(B) to determine what income should be considered available to the Medicaid applicant. The Secretary has not exceeded his authority in promulgating the time-limitation regulation applicable in this case, and such regulation is neither arbitrary nor capricious. Pp. 273-278.

619 F.2d 1265 reversed and remanded.

Neal S. Dudovitz, Los Angeles, Cal., for petitioners.

Brent R. Appel, First Asst. Atty. Gen., Des Moines, Iowa, for respondents.

Justice REHNQUIST delivered the opinion of the Court.

Last Term in Schweiker v. Gray Panthers, 453 U.S. 34, 49-50, 101 S.Ct. 2633, 2643, 69 L.Ed.2d 460 (1981), we upheld the validity of federal Medicaid regulations that permit "deeming" of income between spouses in those States that have exercised the so-called "§ 209(b) option" provided for in the Social Security Act, 79 Stat. 343, as amended, 42 U.S.C. § 1396 et seq. (1976 ed. and Supp.III). "Deeming," in the parlance of the Social Security laws and regulations, means that a State determines eligibility by assuming that a portion of the spouse's income is "available" to the applicant. Because an individual's eligibility for Medicaid benefits depends in part on the financial resources that are "available" to him, "[d]eeming . . . has the effect of reducing both the number of eligible individuals and the amount of assistance paid to those who qualify." Schweiker v. Gray Panthers, supra, at 36, 101 S.Ct., at 2636. We rejected contentions that these regulations were arbitrary or capricious and that the regulations were inconsistent with § 1902(a)(17) of the Social Security Act, 42 U.S.C. § 1396a(a)(17).¹ 453 U.S., at 43, 101 S.Ct., at 2640. In the present case, we are called upon to decide to what extent the State of Iowa, an "SSI State," may consider the income of the institutionalized Medicaid applicant's noninstitutionalized spouse in determining eligibility for Medicaid.

As we explained in greater detail in Gray Panthers, supra, Medicaid as originally enacted "required participating States to provide medical assistance to 'categorically needy' individuals who received cash payments under one of four welfare programs established elsewhere in the [Social Security] Act." Id., at 37, 101 S.Ct., at 2636. This program was restructured in 1972 by Congress, when it replaced three of the four categorical programs with Supplemental Security Income for the Aged, Blind, and Disabled (SSI), 42 U.S.C. § 1381 et seq. (1976 ed. and Supp.III). Fearing that some States might withdraw from the Medicaid program rather than bear the increased costs imposed by the restructuring, Congress offered the States the "§ 209(b) option." 42 U.S.C. § 1396a(f). Under the § 209(b) option, the States may elect to provide Medicaid assistance only to those individuals who would have been eligible under the State's Medicaid plan in effect on January 1, 1972. In other words, the § 209(b) option allows the States to avoid the effect of the link between the SSI and Medicaid programs: States may become either "§ 209(b) States" or "SSI States."

If a State participates in the Medicaid program without exercising the § 209(b) option, the State is required to make Medicaid assistance available to all recipients of SSI benefits. 42 U.S.C. § 1396a(a)(10)(A); 42 CFR § 435.120 (1980).² SSI States, however, are not limited to providing Medicaid benefits to SSI recipients. The Medicaid program offers participating States the option of providing Medicaid assist- ance to certain other groups of individuals, see 42 U.S.C. § 1396a(a)(10)(C), one of which is the "optional categorically needy." See 42 CFR §§ 435.200-435.231 (1980).³ Included among the "optional categorically needy," are (1) individuals who would be eligible for, but for some reason are not receiving, SSI benefits and (2) individuals who would be eligible for SSI benefits but for their institutionalized status. 42 CFR §§ 435.210-435.211 (1980).

With regard to the "optional categorically needy," the Secretary's regulations require the States to "deem" the income and resources of spouses who share the same household. 42 CFR § 435.723(b) (1980). Where both spouses are eligible for Medicaid, the States must "deem" income for the first six months after the spouses cease to live together. After this 6-month period, the States may consider only the income and resources actually contributed by one spouse to the other. § 435.723(c). If only one spouse is eligible for Medicaid, a similar rule applies but the time period is one month instead of six. § 435.723(d).⁴ In effect, § 435.723 places time limita- tions on the States' ability to consider the spouse's income as "available" to the applicant after the spouses cease to live together. The question addressed by the lower courts, and now presented for our decision, is whether this regulation is a permissible exercise of the Secretary's authority under the Act to define what income is "available."

I

Petitioner Elvina Herweg has been in a comatose state since August 1976 as a result of two cerebral hemorrhages. When she was placed in a long-term care facility, her husband, petitioner Darrell Herweg, applied for Medicaid assistance on Elvina's behalf. Elvina does not receive SSI benefits, although the parties and the United States as amicus curiae agree that she is eligible to receive such benefits.⁵ Iowa applied its own formula to determine Elvina's eligibility for Medicaid and to ascertain the amount Darrell would be required to contribute toward his wife's care. This formula was based on the income Darrell earned as a butcher and on standard living allowances allowed Darrell and his three children living at home. In other words, Iowa was "deeming," or attributing, income earned by one spouse to the other.

Iowa, however,...