In a case argued by ElderLawAnswers member Gregory C. Larson and ace Medicaid litigator René H. Reixach, Jr., a federal district court rules that a provision of North Dakota law setting limits on the amount of income that a community spouse can derive from an otherwise permisssible annuity is more restrictive than federal law and therefore invalid. Geston v. Olson (U.S. Dist. Ct. N.D., No. 1:11-cv-044, April 24, 2012).
Before John Geston applied for Medicaid benefits to cover the cost of his nursing home care, his wife purchased an actuarially sound single premium annuity that would provide her a monthly income of $2,734.65. The annuity’s purchase brought the couple’s assets below North Dakota’s limit, but the state denied Mr. Geston’s Medicaid application because the annuity was treated as a countable asset. Although it met all the requirements of the Deficit Reduction Act of 2005, it failed to comply with additional requirements imposed by North Dakota. Specifically, N.D.C.C. § 50-24.1-02.8(7)(b) provides in part that 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. Ms. 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 injunctive and declaratory relief declaring N.D.C.C. § 50-24.1-02.8(7) 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 U.S. District Court for the District of North Dakota, Southwestern Division, rules that N.D.C.C. § 50-24.1-02.8(7)(b) is more restrictive than federal law and violates the federal Medicaid statute. The court also rules that the state law in question violates 42 U.S.C. § 1396r-5(b)(1), which prohibits consideration of the community spouse’s income in the institutionalized spouse’s Medicaid eligibility determination. The court enjoins the state from denying Medicaid benefits to Mr. Geston and awards reasonable costs and attorneys fees to the Gestons. “If there is a ‘loophole’ under federal law as to the treatment of irrevocable and nonassignable annuities under the Medicaid program,” the court writes, “the closing of that ‘loophole’ is best left for Congress to address.”
Bismarck ElderLawAnswers member Gregory C. Larson and well-known Medicaid litigator René H. Reixach, Jr., were lead attorneys for the Gestons. Our thanks to Mr. Larson for bringing the ruling to our attention.
For the full text of this decision, go to: https://attorney.elderlawanswers.com/full-text-of-opinion-in-geston-v-olson-us-dist-ct-nd-no-111-cv-044-april-24-2012-9848
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