Wednesday, July 11, 2012

Federal Court Approves Community Spouse's Purchase of Annuity to Shelter Excess Resources

Earlier this week, the United States Tenth Circuit Court of Appeals issued what might be considered a landmark decision in the realm of "crisis" Medicaid planning.  In Morris v. Oklahoma Dept. of Human Resources (10th Cir., No. 10-6241, July 9, 2012), the Court held that a Community Spouse may use assets in excess of the Community Spouse Resource Allowance ("CSRA") to purchase an immediate annuity, which effectively converts non-exempt resources into an income stream. This strategy allows a Community Spouse to avoid having to spend down all of their excess resources in order for a sick or disabled spouse to be eligible for nursing home Medicaid coverage.

In New York, community spouses are presently permitted to retain excess resources by executing a "spousal refusal," which effectively renders the assets and income of a refusing spouse as unavailable for determining a community spouse's Medicaid eligibility.  However, many counties are now actively bringing post-Medicaid approval "support actions" against refusing community spouses who retain assets in excess of the CSRA.  Like the community spouse in Morris, a community spouse residing in New York may consider purchasing an immediate annuity to convert excess resources into an income stream, thereby rendering that spouse less of of a target for a spousal recovery lawsuit.

The entire Morris opinion can be read here.

1 comment:

  1. So I just heard from a friend that you can sell your annuity, how does that work? I was going to look into it.