Wednesday, October 2, 2013

Recent Elder Law Cases of Note

Here is a brief summary of two important recent court decisions pertaining to Medicaid and Medicare long-term care eligibility issues:

1.  Geston v. Anderson -- On September 10, 2013, the 8th Circuit Court of Appeals struck down as invalid a North Dakota law that provided that an annuity is treated as a countable resource for Medicaid eligibility purposes unless the income derived from the annuity did not exceed the Maximum Monthly Maintenance Needs Allowance ("MMMNA") and unless the combined income of the institutionalized spouse and community spouse did not exceed 150% of the MMMNA.

In its ruling the Court held that North Dakota's law was more restrictive than federal law and thus violated the federal Medicaid statute.

This decision provides helpful validation for the common strategy whereby a community spouse would purchase an annuity to convert a non-exempt resource to a more favorably treated stream of income.

The full decision can be read here.

2. On the other side of the coin,  on September 23, 2013, the Federal District Court for the District of Connecticut ruled in Bagnall, et al v. Sebelius, that a patient who goes to a hospital but is placed in a hospital's "observation status" does not qualify as "an admitted patient" to satisfy the Medicare rule that requires a 3-day hospital stay in order for Medicare to cover any portion of the patient's follow-up care in a nursing home (minimally 20 days, but up to 100 days).

Hospitals' use of observation status has become more prevalent in the past few years as a result of financial disincentives under Medicare rules for hospital admissions.  This ruling, although technically applicable only to Connecticut, confirms the policy that Medicare has enforced nationally.