On Remand, NJ Administrative Judge Again Finds That A Retirement Annuity Owned By A Community Spouse Does Not Preclude Medicaid Eligibility

As I had reported in a March 4, 2009 blog post, New Jersey Administrative Law Judge (“ALJ”) Walter M. Braswell, in E.F. v. Division of Medical Assistance and Health Services and the Union County Board of Social Services, OAL DKT. No. HMA-7536-08 (Union County, February 26, 2009), held that an annuity purchased by a community spouse with retirement assets from the community spouse’s IRA was exempt in determining the institutional spouse’s nursing home Medicaid eligibility. I participated in the E.F. v. DMAHS case as legal counsel for D.F., who is the community spouse and the executor of the estate of his now-deceased spouse, petitioner E.F.

On May 27, 2009, the Director of the New Jersey’s Medicaid agency reversed and remanded the Judge Braswell’s decision. Relying upon the Appellate Division decision of N.M. v. DMAHS, 405 N.J. Super. 353 (App. Div. 2009), the Director held that “a state may now consider the value of an annuity purchased for the sole benefit of the community spouse in determining whether the institutionalized spouse satisfies the resource limits for Medicaid eligibility.” Based on that pronouncement, the Director held that the E.F. annuity “must” be considered in determining eligibility. Because the Director found that the record did not indicate whether the insurance company that issued D.F.’s annuity would object to a change of ownership of the annuity which would preclude a potential purchaser from completing the transaction, and because he found that Petitioner was required to take all steps necessary to liquidate an otherwise available resource, the Director found there to be a material issue of fact necessitating remand of the case to the Office of Administrative Law “for further findings regarding the availability and value of the annuity.” I blogged about the Director’s decision here.

The case was remanded to Judge Braswell for further proceedings. During pretrial proceedings, the state Medicaid agency admitted what the Petitioner had claimed for months: that the community spouse’s retirement annuity cannot be liquidated or sold. As a result, Judge Braswell ruled that “the petitioner’s resources do not exceed the permissible limit for Medicaid eligibility.”

While the case was pending, Respondent issued a new denial notice, finding that Petitioner was ineligible for Medicaid because Petitioner allegedly failed to named the State of New Jersey as the first remainder beneficiary after petitioner’s disabled adult child in the annuity’s beneficiary designation as required by the federal Medicaid rules.  Judge Braswell also ruled on Respondent’s new claim of ineligibility raised for the first time on remand by holding that the parties previously stipulated that the beneficiary designation met all requirements under the Medicaid rules. As a result, Judge Braswell reversed the decision denying Petitioner’s eligibility for nursing home Medicaid benefits. The ALJ’s decision is now again subject to review by the Director of the state Medicaid agency.

The ALJ’s decision can be found here – ALJ’s decision after remand 12-2-09