Reversing a trial court, the Supreme Court of Montana finds that a Medicaid recipient may use post-eligibility income to pay for pre-eligibility medical expenses, and that the state's treatment of any assets held in corporate or trust form as countable violates equal protection. Timm v. Montana Dept. of Public Health and Human Services(Mont., No. CDV 2005-289, April 21, 2008).
Linda Timm entered a nursing home and applied for Medicaid. Under a state Medicaid rule that treats any assets held in corporate or trust form as countable, the state counted the interest of her husband, John, in the closely held family trucking corporation he worked for as a resource and determined Mrs. Timm exceeded the resource limits. Mr. Timm converted his interest in the corporation to a one-third ownership interest in the truck he used for work, which turned the asset to an excludable one because the truck was considered property essential to self-support. After the conversion, the state determined Mrs. Timm was eligible for Medicaid, but found Mr. Timm was not entitled to a community spouse income maintenance allowance (CSIMA).
The Timms appealed the state's decision, arguing the state violated equal protection by not treating Mr. Timm's interest in the corporation as property essential to self-support. In addition, they argued Mrs. Timm should be able to use her post-eligibility income to pay for nursing home care costs she incurred before becoming eligible for Medicaid, thereby reducing her income and increasing Mr. Timm's CSIMA. An administrative law judge affirmed the state's decision, and the district court affirmed.
The Timms appealed again, arguing there was no rational basis for the court's decision to treat corporate property differently from real property and that the Centers for Medicare and Medicaid Services (CMS) has confirmed that old medical bills must be deducted from current income (for more on this, click here). The Timms also argued they should be able to use their outstanding nursing home expenses to offset their countable resources.
The Supreme Court of Montana reverses in part, holding that the rule counting assets simply because they are in corporate or trust form violates equal protection standards and that post-eligibility income may be used to pay pre-eligibility medical bills. According to the court, the state offered no rational basis for treating corporate property differently from property held in other forms. In addition, the court finds that CMS has clearly determined that "costs incurred for services prior to Medicaid eligibility must be considered 'not a Medicaid covered service' so long as they were not actually covered by Medicaid." But the court rejects the Timms' argument that they should be able to offset their countable resources with their outstanding nursing home expenses.
To download the full text of this decision in PDF format, click here.
(If you do not have the free PDF reader installed on your computer, download it here.)
Did you know that the ElderLawAnswers database now contains summaries of more than 1,400 fully searchable elder law decisions dating back to 1993? To search the database, click here.
Subscribe to the Knowledge Bank.
