Facts
Prior to submitting an application for Medicaid benefits, Plaintiff purchased two Medicaid Compliant Annuities that were funded with proceeds from his IRA account. Per the terms of the contracts, the monthly checks from the annuities were to be made payable to Plaintiff’s community spouse, who was also named as the primary beneficiary of both policies. Plaintiff, who was in a nursing home, then submitted an application for Medicaid benefits following the purchase of the two annuities. Plaintiff’s application was denied by the agency who attributed the annuity income payments to Plaintiff resulting in the calculation of his monthly income to exceed the applicable eligibility limit. Plaintiff appealed the agency’s decision which was reversed by the Administrative Law Judge who concluded that because the annuity payments were made solely in the name of the community spouse, they were considered only available to that spouse. The agency petitioned for review of the Administrative Law Judge’s decision.
Issue
The Court was asked to determine whether the income from Plaintiff’s Medicaid Compliant Annuity that has been irrevocably assigned to Plaintiff’s community spouse is considered ‘available’ to Plaintiff and constitutes an improper transfer for less than fair market value.
Holding
The court held that the annuity income payments were for the community spouse’s sole benefit and therefore should not be countable as part of Plaintiff’s income. Therefore, the denial of Plaintiff’s Medicaid application was arbitrary and capricious, resulting in the trial court’s decision being reversed and remanded.
Rationale
As noted by the Plaintiff and upheld by the Court, pursuant to 42 U.S.C. §1396p(c)(2)(B)(i), an individual who has applied for Medicaid benefits “shall not be ineligible for medical assistance…to the extent that…assets were transferred to the individual’s spouse…for the sole benefit of the individual’s spouse.” It is undisputed that Plaintiff transferred the annuity payments to the community spouse for her sole benefit. Furthermore, the annuity contracts, which include the annuity applications on which Plaintiff named the community spouse as payee, are irrevocable. As such, since those payments are made solely in the name of the community spouse, the income shall be considered available only to her in accordance with Section §1396r-5 and should not be assessed as part of Plaintiff’s income.
Read the full case decision here.
If you have any questions regarding the “Name On The Check Rule” or the Hotmer case specifically, please do not hesitate to contact our office.