The Medicaid applicant, S.P., was the named beneficiary of an irrevocable trust established by her brother. Generally, a third-party trust is an “inaccessible” resource, for purposes of Medicaid eligibility.
However, in 2017, S.P. began depositing her Social Security Supplemental Security Income (“SSI”) benefits directly into the trust. In October 2022, when she applied for Medicaid, the trust contained $21,000.
S.P.’s Medicaid application was denied after Medicaid determined that she was over the $2,000 resource limit. Medicaid concluded that, once she started funding the trust with her own income, it became a non-excludable resource. S.P. filed an appeal with the Office of Administrative Law (“OAL”). The Administrative Law Judge (“ALJ”) agreed with Medicaid, finding that, once S.P. began depositing her SSI benefits into the trust, it began containing S.P.’s assets, and the trust became a countable available resource. The Assistant Commissioner adopted the ALJ’s decision, and S.P. filed a further appeal to the Superior Court, Appellate Division.
The appellate court noted that a resource is “available,” for Medicaid eligibility purposes, when the applicant has the right to liquidate all or some of it. Certain resources, including irrevocable trust funds, may be excluded from eligibility when they are “not accessible to an individual through no fault of his or her own.” However, when the person’s own assets are transferred to the trust, the trust funds are no longer “inaccessible through no fault of her own.” Therefore, S.P.’s self-funding of the trust transmuted it into an available resource and, as a result, S.P.’s resources were over the $2,000 limit. The Medicaid denial was affirmed.
A copy of the Superior Court Appellate Division decision in S.P. v. DMAHS can be found here.