Medicaid Applicant’s Assets Are Not “Available Resources” When Applicant Is Incapacitated

A Texas appeals court held that the state could not count the assets of a Medicaid applicant as “available resources” under the Medicaid rules because the applicant was incapacitated and not able to liquidate the assets. Texas Health and Human Services Commission v. Marroney (Tx. Ct. App., No. 03-18-00190-CV, May 24, 2019).

Anna Marroney suffered a stroke and was admitted to a nursing home. Her treating physician described Marroney as “totally incapacitated and incompetent” and as lacking the ability to manage her affairs from the date of her admission to the nursing home.

A representative for Ms. Marroney filed for Medicaid benefits on her behalf. The state denied the application because the cash value of Ms. Marroney’s life insurance policies exceeded Medicaid’s $2,000 resource limit. Marroney’s representative appealed. At the hearing on appeal, the representative argued that Marroney’s assets should not be deemed “available resources” under the Medicaid rules since Marroney was incapacitated, could not liquidate the resources and no one else could liquidate insurance policies she owned. The hearing officer denied the appeal, explaining that the insurance policies should be considered “available resources” for eligibility purposes until a court determines that Marroney was incompetent and appoints a guardian to manage her finances.

Ms. Marroney’s representative filed a petition for guardianship, and the probate court appointed the representative as temporary guardian. Ms. Marroney’s guardian then liquidated her insurance policies. With Marroney’s assets exhausted, the state reopened the application for Medicaid benefits and held a second fair hearing. The hearing officer determined that Marroney became eligible for benefits when a guardian was appointed, but the officer sustained earlier denials regarding her eligibility prior to that date. Ms. Marroney appealed to court, and the court reversed, finding her eligible for Medicaid from the date of her admission to the nursing home The state then appealed, arguing that Ms. Marroney did not become incapacitated until the probate court ruled she was incompetent, and because Marroney had more than $2000 in resources until shortly thereafter.

On appeal, the Court of Appeals affirmed. The Court ruled that Ms. Marroney was incapacitated when she entered the nursing home and no one else had access to liquidate her assets. As a result, her assets were not “available resources” under the Medicaid rules, and there was no basis to deny benefits. The Court held as follows:

Due to her incapacitated state, Marroney’s assets could not constitute “resources” for determining Medicaid eligibility. … Under applicable … regulations, assets are only resources if the applicant or a representative has “the right, authority[,] or power to liquidate” those assets. If a property right cannot be liquidated, the property will not be considered a resource . . . .” [B]ecause Marroney’s assets could not be liquidated during most of the disputed period, those assets could not satisfy the regulatory definition of “resources” during that time.

The Court of Appeals found that the state’s denial of Medicaid benefits was “not supported by substantial evidence … “

For the full text of this decision, go to: Texas Health and Human Services Commission v. Marroney

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