M.M. filed for Medicaid benefits on three occasions. In June 2018, M.M. filed her first Medicaid application. Benefits were denied due to excess income; that is, her income exceeded the monthly cost of the assisted living facility (ALF) where she resided. She received $6,141.93 per month from an annuity she purchased for $73,673.11 in May 2018, and a monthly pension in the amount of $1,325.66.
M.M. claimed that the annuity met all requirements in the Medicaid rules and should not be considered as a “resource.” Among other things, M.M. claimed that the annuity was irrevocable, non-assignable and non-transferable, as required by the Medicaid rules. Medicaid agreed with M.M. and did not count the annuity as a resource. However, the application was denied on another basis, i.e., because the agency found that M.M. had sufficient income to pay privately for the cost of her care in the ALF and did not need Medicaid. M.M. did not appeal from the denial.
In August 2018, M.M. filed a second application for Medicaid benefits. The application was withdrawn in September 2018 because at that time M.M.’s assets exceeded the Medicaid resource limit.
M.M. filed for Medicaid a third time on October 15, 2018. At that time, her income again consisted of a monthly pension in the amount of $1,325.66 along with monthly annuity payments. However, the annuity she owned at the time of the third application paid $5,117.85 per month, about $1,000 per month less the annuity purchased in May 2018. The annuity document stated it had been purchased in July 2018 for $61,389.25.
The local Medicaid agency, the Ocean County Board of Social Services, denied M.M.’s third application due to excess resources. The agency held that, because M.M. was able to terminate the May 2018 annuity after 2 months and convert it to a new annuity, the annuity not “irrevocable” as required by the rules and thus was a countable resource.
M.M. appealed, asking for a hearing before an administrative law judge (ALJ). After the hearing, the ALJ affirmed the denial of Medicaid benefits. The ALJ held that M.M.’s ability to revoke the purportedly “irrevocable” annuity created a “seemingly unlimited discretion [that] could be used at the petitioner’s request to move the funds from the July 2018 annuity into a financial instrument more immediately accessible to the petitioner at any time prior to the annuity’s expiration date.”
The Director of the state Medicaid agency then issued a Final Agency Decision affirming the denial of Medicaid benefits. The Director held that the “facts and documents in this case show that the annuity funds can be accessed at the Petitioner’s request.”
The Initial Agency Decision by the ALJ is attached here –
The Medicaid Director’s Final Agency Decision is attached here –
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