The The Times Leader newspaper, a daily newspaper located in Wilkes-Barre, Pennsylvania, recently posted a report on its internet homepage on the James vs. Richman lawsuit. The James case was originally filed in federal district court in Pennsylvania, and concerned an application for Medicaid benefits submitted by Pennsylvania residents. The James case substantially changed the law concerning the use of annuities to help the elderly and disabled, in the states within the Third Circuit Court of Appeals, including Pennsylvania and New Jersey, remain in their homes. The reporter described the case in the lead paragraph as follows:

In a precedent-setting ruling, a federal appellate court has said the state Department of Public Welfare cannot consider a $250,000 annuity a Wilkes-Barre woman purchased following her husband’s entry into a nursing home as an asset when determining whether he was eligible for Medicaid benefits.

I would describe the James decision differently. In my opinion, the Court reached the right result in view of the economic realities faced by the nursing home resident’s spouse who continues living in the community after the ill spouse is institutionalized. Since nursing homes in New Jersey cost an average of $10,000 per month, or $120,000 per year, and since real estate taxes and other costs associated with home ownership in New Jersey are the highest in the country, the community spouse simply cannot afford to remain in his or her home after the ill spouse is admitted to a nursing home on Medicaid because, after institutionalization, the community spouse must survive on the meager resource allowance permitted under the Medicaid rules. The Third Circuit understood that the purpose of the annuity is to protect the community spouse from impoverishment.

The Times Leader article can be found here – newspaper-article-on-james-v-richman1