Spouse's Purchase of Annuity Pre-Medicaid Eligibility Determination Was Not Improper Transfer

An Ohio appeals court rules that a Medicaid applicant's spouse's purchase of an annuity with funds in excess of her community spouse resource allowance was not an improper transfer because the purchase occurred before the determination of Medicaid eligibility. Koenig v. Dungey (Ohio Ct. App., 1st Dist., No. C-140111, Oct. 22, 2014).

Elaine Koenig's husband entered a nursing home and applied for Medicaid. The state determined that the community spouse resource allowance (CSRA) was $109,560. Mrs. Koenig purchased an annuity for $121,783.56. The state granted Mr. Koenig benefits, but imposed a penalty period after concluding that the purchase of the annuity was an improper transfer.

Mr. Koenig appealed, but the state upheld the penalty period because Mrs. Koenig used funds in excess of her CSRA to purchase the annuity (Mr. Koenig died during the appeal process). Mrs. Koenig appealed to court, and the trial court reversed, concluding that the purchase of the annuity was not an improper transfer. The state appealed.

The Ohio Court of Appeals affirms, holding that Mrs. Koenig’s "annuity purchase with funds in excess of the CSRA was not an improper transfer when the transfer occurred after institutionalization, but preeligibility." The court relies on the decision in Hughes v. McCarthy (6th Cir., No. 12-3765, Oct. 25, 2013) to rule that prior to a determination of Medicaid eligibility, federal law permits unlimited transfers to a spouse.

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