Medicaid program; deeming of income between spouses; categorically needy--HCFA. Final rule with comment period.

These final regulations revise Medicaid rules for determining the financial eligibility and the level of Medicaid payments for the institutional care of aged, blind, and disabled categorically needy individuals when one spouse is institutionalized and the other spouse is not. In accordance with a United States Supreme Court ruling, we are reinstating the rules that were in effect prior to imposition of lower court orders (now reversed) that required HCFA to change its regulations. The regulations affect those States that, as permitted by statute, use more restrictive eligibility criteria than those applied nationally under the Supplemental Security Income (SSI) requirements. They also apply in Puerto Rico, Guam, and the Virgin Islands. These reinstated rules permit these jurisdictions, in situations when one spouse is institutionalized, to consider a portion of the income of one spouse as available for the care of his or her institutionalized spouse, whether or not the income is actually contributed to the spouse. This practice is known as "deeming of income." We are also clarifying a regulation that applies in States that use the SSI eligibility criteria and may apply in States that use more restrictive eligibility criteria.