Spousal Impoverishment Rules in Illinois: Allowances and Look-Back

Under the spousal impoverishment rules in Illinois, when one spouse needs Medicaid to pay for a nursing home or certain home and community-based services, the spouse who stays at home can keep up to $143,172 in countable assets and up to $4,066.50 in monthly income for 2026, plus the house, one car, and personal belongings. These protections exist so the at-home spouse (the “community spouse”) is not left destitute by the cost of the other spouse’s care. The dollar limits are set by the Illinois Department of Healthcare and Family Services and updated each year.¹

Assets the Community Spouse Can Keep

The Community Spouse Resource Allowance, or CSRA, is the amount of countable assets the at-home spouse is allowed to retain. For applications received on or after January 1, 2026, the Illinois CSRA is $143,172, up from $135,648 the previous year.¹² That figure is rising on a schedule set by Public Act 102-1037, which took effect June 2, 2022 and requires a 2.5 percent annual increase for ten years until Illinois reaches the federal maximum.³ The federal ceiling currently sits at $162,660.⁴

When the application is filed, the state totals the couple’s non-exempt resources no matter whose name is on them. The CSRA is set aside for the community spouse. Anything above that amount is considered available to pay for the institutionalized spouse’s care and generally must be spent down before Medicaid will pay.⁵ If the couple’s combined countable assets fall below the CSRA, the applying spouse can simply transfer all of them to the community spouse.⁶

One point matters enormously: the CSRA is calculated once, at the initial application or long-term care determination. It is not revisited at later redeterminations.¹ If the community spouse later inherits money or otherwise acquires new assets, the state does not reopen the calculation.⁵ The nursing-home spouse is allowed to transfer assets to the community spouse only up until the first redetermination after approval, so the moves need to happen early.

Assets That Don’t Count

Several categories of property fall outside the resource limit entirely for 2026:

The primary residence, as long as its equity value is less than $752,000.⁴
One vehicle.
Personal property and certain adjoining property.
Burial spaces and some life insurance policies, which are generally excluded for adults 65 and older or those who are blind or disabled.⁷

Income the Community Spouse Can Keep

The Community Spouse Maintenance Needs Allowance, or CSMNA, sets how much monthly income the community spouse is entitled to. As of January 1, 2026, the Illinois maximum is $4,066.50 per month, up from $3,948.50.¹

The amount that actually gets diverted from the nursing-home spouse is the gap between the community spouse’s own gross monthly income and $4,066.50. A community spouse already earning $4,066.50 or more on their own gets no diversion. The diversion is permitted, not required, and it only applies to income actually passed to the community spouse. It cannot come out of Supplemental Security Income, and it does not apply for any month the applicant was not residing in a nursing home or supportive living facility on the first of the month.⁸

The $4,066.50 is a ceiling, not a floor. The federal minimum monthly maintenance needs allowance effective July 1, 2026 is $2,705 for Illinois and most other states. A community spouse with high housing costs can raise that floor through an excess shelter allowance. The 2026 shelter threshold is $811.50 per month; anything above that gets added to the $2,705 minimum, up to the $4,066.50 cap.⁹

What the Nursing-Home Spouse Keeps

The spouse receiving care is allowed a personal needs allowance of $60 per month, or $90 per month for veterans receiving benefits.⁶ That is above the federal minimum of $30.¹⁰ Everything else, after the personal needs allowance and any permitted CSMNA diversion, goes toward the cost of care.

Asking for More Than the Standard Allowances

If the standard CSRA will not produce enough income to bring the community spouse up to the CSMNA, the couple can ask for an increase. A CSRA above $143,172 is only available through a court order or a fair hearing decision finding that a larger amount is needed to generate enough income.⁵ The appeal requires a quote for a single premium life annuity with fixed monthly payments; the decision then sets both the allowable CSRA and the monthly amount that will count as income to the community spouse. The couple does not have to actually buy the annuity. A court order or hearing decision can also raise the CSMNA above the standard formula.⁸

Transfers Between Spouses and the Five-Year Look-Back

Illinois reviews asset transfers made within the five years before a long-term care Medicaid application. Transfers for less than fair market value during that window can trigger a penalty period in which Medicaid will not pay for nursing home care.⁷ Transfers between spouses to reach the CSRA limit are a specifically permitted exception; moving assets into the community spouse’s name to bring the applying spouse under the limit is the whole point of the framework.

Estate Recovery After the Medicaid Spouse Dies

Illinois can file a claim against a Medicaid recipient’s estate after death to recoup the cost of care, but several protections shield the surviving community spouse and family.

The state cannot recover from the estate while a spouse survives. The same protection applies if the recipient leaves a child under 21 or a blind or disabled child of any age.¹¹¹²
Under Public Act 102-1037, effective June 2, 2022, the state can no longer place new liens on real property to recover Medicaid costs. Liens filed before that date remain enforceable, though even those should not have been placed on a home occupied by the community spouse.¹¹
For recipients who died on or after July 1, 2022, no recovery is allowed against the first $25,000 of the estate’s value.¹²
Heirs can request a hardship waiver, for example when the estate asset is a family business or farm that is the heir’s primary income, or when recovery would push the heirs onto public assistance.¹³

Life insurance paid to a named beneficiary and bank accounts with pay-on-death designations are outside estate recovery entirely.¹²

How to Apply and Request a Hearing

Families can file a Medicaid long-term care application in several ways:¹⁴

Online through the Illinois Application for Benefits Eligibility portal at abe.illinois.gov.
By phone, through the DHS Help Line at 1-800-843-6154.
In person at a local Family Community Resource Center.
By mail, using a paper application sent to the local FCRC.

Anyone living in or moving to a nursing facility must also complete Form C, and Form D is required to request the transfer of income or assets to a community spouse.¹⁵ Expect to produce bank statements, property deeds, life insurance policies, vehicle titles, five years of tax returns, and documentation of any assets transferred in the preceding 60 months. DHS must issue an eligibility decision within 45 days, or 60 days when the application is disability-based.

Illinois long-term care facilities are required to inform residents and prospective residents about these spousal protections at admission and each year afterward.¹ If you disagree with an eligibility decision or CSRA determination, you can request a fair hearing by calling 1-800-435-0774 or writing to the Department of Healthcare and Family Services in Chicago.¹⁵

1
Illinois Department of Healthcare and Family Services. Provider Notice – Prevention of Spousal Impoverishment Standards
2
Illinois Department of Human Services. Manual Release MR #26.05
3
Illinois State Bar Association. 2022 Legislative Roundup
4
Illinois Department on Aging. Spousal Impoverishment Standards
5
Illinois Department of Human Services. Community Spouse Resource Allowance
6
Illinois Legal Aid Online. Community Spouse Rules for Medicaid
7
Illinois Legal Aid Online. Medicaid Common Questions
8
Illinois Department of Human Services. PM 15-04-04-a – Community Spouse Maintenance Needs Allowance
9
Medicaid.gov. 2026 SSI, Spousal Impoverishment, and Medicare Savings Program Standards
10
Medicaid.gov. Spousal Impoverishment
11
Illinois Legal Aid Online. Can Medicaid Sue an Estate to Recover Money Spent on Care
12
Illinois Department of Healthcare and Family Services. Guide to the Medicaid Estate Recovery Program
13
Illinois Department of Healthcare and Family Services. Liens and Estate Recovery
14
Illinois Department of Healthcare and Family Services. Applying for Medicaid
15
Illinois Department of Healthcare and Family Services. Mail-In Application for Medical Benefits