In a precedent-setting decision approved for publication, the Appellate Division of Superior Court has reversed the denial of our client’s application for Medicaid/MLTSS eligibility . Read the case here: C.L. vs DMAHS and Bergen Cnty A-4284-19 Appellate Decision 10-17-2022
The case involved the purchase of a certain annuity contract in 2019 as part of the client’s “Medicaid spend-down.” The contract terms explicitly said — in multiple places — that after the first ten days, it was irrevocable, non-cashable, unassignable, could not be surrendered or commuted, and had a zero cash value. Starting on the effective date of the contract, the applicant would receive a fixed and unchangeable payment each month until the contract was exhausted. Consequently, under the statutes and regulations which govern the Medicaid program, these payments should have just been treated as her monthly “income.” Instead, the Bergen County Board of Social Services treated the entire purchase price of the annuity contract as a “resource, ” and since there is a $2,000 resource limit for eligibility, the application was denied due to supposed “excess resources.”
The Medicaid laws specify that something isn’t a “resource” unless its owner has the right and power “to convert [it] to cash to be used for his or her support and maintenance.”
In deciding that the applicant had the right to revoke her annuity, the County pointed to a phrase in the contract which notified the annuity purchaser that “only the National President or the National/Treasurer of the [company that issued the annuity] may, in writing, make or change the contract or waive any of its requirements.” The applicant argued that this phrase didn’t enable her to demand or compel a return of her funds, or to compel a change of any kind. Rather it merely notified the purchaser of who in the company was authorized to deal with any such issues. The County, the Administrative Law Judge, and the Division of Medical Assistance and Health Services basically disregarded this fatal flaw in their interpretation. Applying basic principles pertaining to the ways that contracts are interpreted, the Court recognized that the State was wrong in its analysis. Finding that the annuity contract was “unambiguous” and “irrevocable,” the Court held that the decision must be reversed.
Medicaid Annuity planning continues to be alive and well in New Jersey.
Every Medicaid/MLTSS application has its own unique legal issues lurking. Call for advice and analysis if you wish to apply for Medicaid/MLTSS to pay for long-term care. ……….. 732-382-6070