Alabama Medicaid Spousal Impoverishment 2026: CSRA Guide

Alabama Medicaid spousal impoverishment rules protect the at-home spouse when one partner needs nursing home care. The community spouse can generally keep up to $162,660 in assets, and she keeps all of her own income; where it falls short, a diversion from the applicant's income brings her up to at least $2,705.00 a month.

How Alabama Medicaid Spousal Impoverishment Works

When one spouse enters a nursing facility and applies for Alabama Medicaid long-term care coverage, federal spousal impoverishment rules under 42 USC § 1396r-5 protect the other spouse from losing all of their shared assets. These rules have two parts: an asset protection for the at-home spouse, and an income protection.

Alabama is an income-cap state, meaning an applicant for nursing-facility Medicaid or the Elderly and Disabled Waiver must have gross income at or below $2,982 per month (or divert the excess into a Qualifying Income Trust, also called a Miller Trust). Some other Alabama waivers use a separate, much lower income limit, so don't assume $2,982 applies to every waiver. But the income-cap rule for the applicant does not affect the community spouse's separate asset and income protections.1

Throughout this guide, the spouse entering long-term care is the institutionalized spouse. The spouse remaining at home is the community spouse.

How the CSRA Works

The Community Spouse Resource Allowance (CSRA) is the amount of countable assets the community spouse gets to keep when the institutionalized spouse applies for Medicaid long-term care coverage.1

Counting the Couple's Assets

To work out the community spouse's protected share, Alabama Medicaid adds up the couple's combined countable resources and starts from half of that total.1 The date those resources are counted as of changes the answer, so ask the Alabama Medicaid Agency which date it is using for your case and keep account statements from that date.

The Half-of-Assets Formula

Alabama applies the federal formula: the community spouse keeps half of the couple's total countable assets, subject to a floor and a ceiling.1

For 2026:1

• Minimum Protected Resource Amount: $32,532 (the community spouse keeps at least this amount even if half of the couple's assets is less)1
• Maximum Protected Resource Amount: $162,660 (under the standard calculation, if half exceeds this figure, the community spouse's share is set at $162,660)1

Alabama's rule applies the federal maximum as the ceiling on the community spouse's protected share. That is the standard, not the most the law ever allows: under federal law binding on Alabama, a fair hearing or a court order can set a higher resource allowance (see the planning section below).1

A worked example illustrating the formula:

The figures below are hypothetical and shown only to illustrate how the calculation works. They are not a real case and not a prediction of your own result.

A couple in Birmingham has $100,000 in joint savings and $60,000 in the community spouse's IRA, and the Agency counts the IRA. Total countable assets: $160,000. Half is $80,000 (within the floor and ceiling), so the community spouse keeps $80,000. The institutionalized spouse's share is $80,000. Of that, $2,000 is the Alabama applicant asset limit. The remaining $78,000 must be spent down before Medicaid eligibility is established.1

What Counts as a Countable Asset?

Both spouses' countable assets are combined for this count, whichever spouse's name is on the account. Countable assets generally include:

• Checking and savings accounts
• CDs and money market funds
• Stocks, bonds, and mutual funds
• Cash surrender value of life insurance, where the total face value of all policies on one person is above $1,5002
• Non-home real estate and investment property

Exempt assets (left out of the count) include the primary home, one vehicle, household goods and personal effects, burial spaces, and designated burial funds.1

How the MMMNA Works

The Minimum Monthly Maintenance Needs Allowance (MMMNA) is the income protection for the community spouse. It is a floor, not a cap: she keeps all of her own income, and the MMMNA is the monthly total that a diversion from the applicant's income must bring her up to. The $4,066.50 maximum standard normally caps that diversion; it is not a limit on what she may keep.1

For 2026, Alabama applies:1

• Floor (minimum MMMNA): $2,705.00/month (effective July 1, 2026, through June 30, 2027)1
• Maximum standard in Alabama: $4,066.50/month (effective January 1, 2026)1

Alabama applies the federal maximum standard of $4,066.50/month. Under federal law binding on Alabama, a fair hearing can set a higher allowance where the community spouse shows exceptional circumstances causing significant financial duress (see the FAQ below).1

The Name-on-the-Check Rule

Under federal law (42 USC § 1396r-5(b)), the community spouse keeps all of their own income regardless of amount: none of it is deemed available to the institutionalized spouse. If a pension arrives in the community spouse's name alone, it is treated as theirs alone; income paid in both names is generally split half to each. Only the institutionalized spouse's income flows toward the nursing facility cost.1

Income Diversion

When the community spouse's income falls below the $2,705.00/month floor, Alabama allows an income diversion from the institutionalized spouse's income to bring the community spouse up to the floor (or higher, normally up to the $4,066.50/month maximum standard, if excess shelter costs justify it).1

Worked example #1 illustrating income diversion:

The figures below are hypothetical and shown only to illustrate how the calculation works. They are not a real case and not a prediction of your own result.

The community spouse receives $1,500/month from Social Security. The MMMNA floor is $2,705.00. The shortfall is $1,205.00/month. The institutionalized spouse receives $2,200/month in Social Security. After subtracting the $30 Personal Needs Allowance and the resident's Medicare Part B premium, most of that income is available. The $1,205.00 shortfall is diverted to the community spouse, and the remainder goes to the nursing facility as patient liability.1

The community spouse's effective monthly income rises from $1,500 to $2,705.00, a meaningful difference.1

Reaching the MMMNA Maximum

The community spouse can receive up to the $4,066.50/month maximum standard if their housing costs exceed the federal excess-shelter standard, which is $811.50 a month from July 1, 2026. Housing costs above that standard raise the allowable income toward the maximum.1

The Home

The primary residence is exempt from Medicaid eligibility calculations while the community spouse lives there. The home's equity does not count as a resource.1

Alabama caps home equity at the limit HHS publishes each year, but the cap does not apply while the applicant's spouse lives in the home.1

Alabama also applies a 60-month lookback on asset transfers. For a nursing-home applicant it is counted from the first day of the month of the original, initial application; for someone on a home and community-based waiver, from the later of that date or the first day of the month of the transfer.1 Giving the home away within that window can create a penalty period, with limited exceptions: a transfer to a spouse, to a child under 21 or a blind or permanently and totally disabled child, to a sibling with an equity interest who lived there at least a year before the move into care, or to a caregiver child who lived there at least two years and whose care kept the parent out of a facility.3 Speak with an Alabama elder law attorney if protecting the home from eventual estate recovery is a concern.

Assets That Are Exempt

Beyond the home, several other asset categories are excluded from the count entirely:1

• Primary residence (while community spouse lives there)
• One vehicle, excluded to the extent the federal SSI resource rules Alabama applies allow (20 C.F.R. § 416.1218)1
• Household goods and personal effects (furniture, clothing, appliances), totally excluded
• Designated burial funds (Alabama's institutional burial-fund exclusion is $5,000)1
• Burial spaces for the applicant and spouse2
• Life insurance where the total face value of all policies on one person is $1,500 or less, in which case the cash surrender value is entirely excluded2

Retirement accounts (IRAs, 401(k)s) are not among the Alabama exclusions listed above. Before assuming the community spouse's retirement account is protected, ask the Alabama Medicaid Agency how it will count each spouse's account.

The Application Process

Who Administers This

Long-term care Medicaid in Alabama is administered by the Alabama Medicaid Agency. The community spouse's CSRA and MMMNA are calculated as part of the nursing home Medicaid application.

Getting the Calculation Early

Ask the Alabama Medicaid Agency early, around the time of nursing facility admission, how it will calculate the community spouse's share and which date it will count assets as of. Gather the asset records then, while they are easiest to find. Contact the Agency through its website, or start an application through the elderly and disabled portal at eanddapplication.medicaid.alabama.gov.

How to Apply for Long-Term Care Medicaid

For a full walkthrough, see How to Apply for Alabama Medicaid. In brief:

Alabama's Income-Cap Rule and Spousal Impoverishment

Because Alabama is an income-cap state, the institutionalized spouse must have gross income at or below $2,982/month, or establish a Miller Trust for the excess. This income-cap requirement is separate from the community spouse's protections. The community spouse's income and the MMMNA are determined independently of whether a Miller Trust is needed.1

Alabama Medicaid Spousal Impoverishment Planning Strategies

Alabama's CSRA and MMMNA provide a solid baseline, but planning can matter when countable assets significantly exceed the $162,660 maximum standard. Common approaches include:1

• Converting countable assets to exempt ones: prepaying burial, repairing or improving the home, purchasing a vehicle for the community spouse.
• Community-spouse annuities: converting countable assets above the CSRA into an income stream. Annuities must meet the federal Deficit Reduction Act of 2005 requirements, which generally include naming the state as a remainder beneficiary.3 Confirm the current requirements with an Alabama elder law attorney before purchasing one.
• Fair hearing to raise the CSRA: if the calculated CSRA does not generate enough income to bring the community spouse to the MMMNA floor, a fair hearing can result in a resource allowance above $162,660. Federal law requires the state first to count all the income the institutionalized spouse could make available to the community spouse, and the hearing must be held within 30 days of the request. Alabama's own published rules don't describe this route, so confirm the filing steps with the Alabama Medicaid Agency or an elder law attorney.1

For broader options, see Medicaid Planning Strategies. Couples with assets substantially above the $162,660 maximum standard should consult an Alabama-licensed elder law attorney before applying.1

Where to Get Help in Alabama

Learn More

Find personalized help understanding Alabama Medicaid spousal impoverishment rules at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.