Major Change in Title XIX/Medicaid Planning
A recently decided case may change the landscape for Title XIX/Medicaid planning. In what has become a landmark case,Lopes v Starkowski, the Second Circuit Court of Appeals has confirmed that a non- assignable single premium annuity is not counted as an asset and does not prevent a spouse from receiving Medicaid benefits.
In this case, Mrs. Lopes filed an application for Medicaid benefits on behalf of her husband to cover the costs of his nursing home care. The Department of Social Services denied the application stating that the Single Premium Annuity she owned was an asset that would prevent her husband from receiving Medicaid benefits. Mrs. Lopes fought the denial of her husband’s application throughout State Courts and into the Federal Appellate Court. Recently the Second Circuit Court of Appeals ruled in favor of the family and against the position stated by the State of Connecticut.
This case has opened several more options to clients and elder law attorneys to be able to use existing assets by purchasing a Single Premium Annuity and still be able to obtain Medicaid benefits. Through this case, elder law attorneys should be able to provide for the spouse of the potential Medicaid applicant even in the event of some type of spend down is required. This allows for more effective Title XIX planning even after a person has entered a nursing home.The fallout from this case could result in the Department of Social Services finding other reasons to deny Medicaid applications or look to legally liable relatives as a source of recovery for Medicaid benefits paid.
Although many elder law attorneys and our clients are relieved to hear of this outcome, it is recommended that the spouse of a potential Medicaid applicant should not rush out to buy a single premium non-assignable annuity just yet. Anyone who looks to take advantage of the decision in Lopes v Starkowskishould do so with the full understanding that the possibility that the Department of Social Services may still legally contest the potential income stream and could require the individual to “sell” their rights to the annuity. This sale could result in income or a new asset available to the party seeking Medicaid benefits, which the State could consider accessible to pay for the cost of their care.
This area of the law is very complicated and ever changing. It is very important to speak to an Elder Law attorney who can navigate your through the very intricate Medicaid requirements and make you fully aware of all potential issues before seeking any Medicaid benefits.
Attorney Robert A. Scalise, Jr. is a Partner of the law firm Ericson, Scalise & Mangan, PC located at 35 Pearl St., New Britain, CT. www.esmlaw.com. His practice concentrates on Elder Law, Estate Planning, Probate, Estate Administration, Title 19 Asset Preservation and Real Estate. He is a is a member of the National Academy of Elder Law Attorneys.