Judge William Martini of the Federal District Court for the District of New Jersey has issued a preliminary injunction barring the New Jersey Division of Medical Assistance and Health Services (DMAHS) from treating a certain type of annuity contract as a countable resource in connection with a Medicaid application. The case is JANE CUSHING, by her attorney-in-fact, Evelyn Fornale vs. Jennifer Langer Jacobs, Ass’t Commissioner of DMAHS of NJ and Carole Johnson as Commissioner of the Dep’t of Human Services, and it was decided in U.S. District Court for the District of New Jersey under docket # Civil Action 2:20-130, last week. Cushing, Jane–Opinion Cushing, Jane–Order granting Summary Judgment
The case centered around Jane Cushing’s application for MLTSS/medicaid benefits to pay for her nursing home care. As part of the “spend-down” of the excess marital assets, Mr. Cushing purchased a single premium, immediate, non-transferrable, level term, irrevocable, noncashable, nontransferrable annuity contract which would pay him equal monthly payments during the term of the contract. The State of New Jersey was named as the first beneficiary in case he died before the term of the contract was up. When the MLTSS application was reviewed by the County Board of Social Services, the annuity should have been treated as a fixed source of income for Mr. Cushing, rather than a resource that could be liquidated and spent. However, the County Board of Social Services denied eligibility on the basis that Mr. and Mrs. Cushing have excess available resources.
“Resources” and “Income” are two different things in the realm of Medicaid. A long line of cases has evaluated this sort of annuity contract and has held them to “income,” but not “resources” because they cannot be liquidated. In Cushing, the County Board was relying on an informal directive from DMAHS, and the Court found that DMAHS was wrong to consider the contract to be an available resource when its salient terms specified that it was irrevocable.
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