In a case argued by ElderLawAnswers member Gregory C. Larson and Medicaid litigator René H. Reixach, Jr., a federal appeals court holds that an annuity purchased by a Medicaid applicant's spouse after the applicant entered a nursing home cannot be counted as an available resource. Geston v. Anderson (8th Cir., No. 12-2224, Sept. 10, 2013).
North Dakota resident John Geston entered a nursing home, and his wife purchased a single premium annuity. The annuity provided that it could not be sold or transferred. Mr. Geston applied for Medicaid benefits, which the state denied on the grounds that the annuity was an available asset. Under North Dakota law, an annuity is a countable asset unless the income derived from it does not exceed the maximum monthly maintenance needs allowance permitted under federal law and unless the combined income of the institutionalized and community spouses does not exceed 150 percent of the same allowance. Mrs. Geston's income from the annuity satisfied the first requirement but it pushed the couple’s combined income over the second limit.
The Gestons filed suit in federal court seeking relief declaring the state law invalid and preempted by federal law because it is more restrictive than federal law and impermissibly allows the state to consider a community spouse’s income in determining an institutionalized spouse’s Medicaid eligibility. The district court ruled that the state law was more restrictive than federal law and violated the federal Medicaid statute. The state appealed, arguing that federal law allows the state to count the annuity as a resource.
The U.S. Court of Appeals, 8th Circuit, affirms, holding the annuity is not a resource. According to the court, because Mrs. Geston has no right to liquidate the annuity, "the annuity benefits are not a resource, but rather are income as indicated by the statute defining 'unearned income.'" The court also rejects the state's argument that the annuity could be classified as a resource because it was purchased with the couple's resources after Mr. Geston entered the nursing home. The court rules that if "resources are converted to uncountable income after institutionalization but before the filing of an application, then they do not affect the institutionalized spouse’s eligibility," so the annuity was an uncountable stream of unearned income at the time of the classification, not a resource.
Bismarck ElderLawAnswers member Gregory C. Larson and well-known Medicaid litigator René H. Reixach, Jr., were attorneys for the Gestons.
For the full text of this decision, go to: https://media.ca8.uscourts.gov/opndir/13/09/122224P.pdf
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