Annuity Benefitting Medicaid Applicant Need Not Name State as Remainder Beneficiary

A Georgia court of appeals holds that while annuities benefitting a Medicaid applicant's spouse must name the state as a remainder beneficiary to avoid a transfer penalty, annuities benefitting the Medicaid applicant do not. Cook v. Bottesch (Ga. Ct. App., Nos. A13A0006, A12A2268, A12A2269, A12A2506, March 26, 2013).  

John Bottesch, Carol Shorey, Boyce Robertson, and Jerry Glover all resided in nursing homes and applied for Medicaid. The spouses of Mr. Bottesch, Ms. Shorey, and Mr. Robertson purchased annuities, while Mr. Glover purchased an annuity for himself. The applicants refused to name the state as a remainder beneficiary on the annuities, so the state imposed a transfer penalty.

A hearing officer determined that the applicants with spousal annuities were not eligible for Medicaid until they named the state as a remainder beneficiary. A trial court held that the state law that required the community spouse to name the state as a remainder beneficiary violated federal law because the annuities were not assets for the purposes of imposing a transfer penalty. After a hearing, the state determined Mr. Glover was subject to the penalty period as well, and the trial court affirmed. All of the applicants appealed.

The Georgia Court of Appeals reverses, holding that a plain reading of federal law "shows that annuities benefitting community spouses must name the [s]tate as a remainder beneficiary to avoid automatically being treated as the disposal of an asset for less than fair market value, but annuities benefitting applicant institutionalized spouses . . . need not do so." The court notes that its decision that Mr. Glover not be required to name the state as a remainder beneficiary in order to avoid a transfer penalty is "partly inconsistent" with federal regulations.

For the full text of this decision, go to: https://efast.gaappeals.us/download?filingId=70c1d9f0-f6f0-4335-90f7-aba05f9cf97d

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