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Estate of G.E. v. Division of Medical Assistance and Health Services

Decided: March 2, 1994.

ESTATE OF G.E., APPELLANT,
v.
DIVISION OF MEDICAL ASSISTANCE AND HEALTH SERVICES, RESPONDENT



On appeal from Department of Human Services, Division of Medical Assistance and Health Services.

Michels, Skillman and Wefing. The opinion of the court was delivered by Skillman, J.A.D.

Skillman

G.E. and V.E. were married in 1942. G.E. was diagnosed with Alzheimer's disease in 1990 and had to be admitted into a nursing home in November 1991. At that time G.E. was receiving a pension of $1,012.67 per month and social security benefits of $895 per month. In addition, V.E. was receiving social security benefits of $364 per month. Since the nursing home charges exceeded $4,100 per month, G.E.'s and V.E.'s combined monthly income of $2,271.67 was insufficient to meet the costs of G.E.'s institutional care. As a result, V.E. began to experience difficulty meeting her own financial needs.

V.E. filed an action in the Family Part of the Chancery Division seeking spousal support. This suit resulted in the entry of an

order on January 23, 1992, awarding V.E. monthly support of $1,075 to be paid directly by the administrators of G.E.'s pension fund. The order also directed V.E. to make prompt application for Medicaid and/or other welfare and social service benefits on G.E.'s behalf. The court subsequently entered a Qualified Domestic Relations Order (QDRO) to effectuate the direct pension payments to V.E. Although G.E.'s pension administrator continued to draw checks in the name of G.E., V.E. cashed the checks and applied the proceeds to her own living expenses.

On January 17, 1992, V.E. submitted an application for Medicaid benefits on behalf of her husband. On January 23, 1992, the Ocean County Board of Social Services (the Board) denied the application on the ground that G.E.'s monthly income exceeded the then applicable Medicaid income threshold. In reaching its decision, the Board included the full amount of G.E.'s pension payments as countable income, refusing to treat the court-ordered transfer of these funds to V.E. as rendering them "unavailable" to G.E.

On V.E.'s appeal to the Division of Medical Assistance and Health Services (the Division) on behalf of her husband, an Administrative Law Judge ruled that it was improper for the Board to include the pension funds payable to V.E. as income to G.E. for the purpose of determining his Medicaid eligibility. However, the Director reversed this decision, stating that to disregard G.E.'s pension benefits would "constructively eliminate the income standard . . . for a class of Medicaid applicants. Court-ordered spousal support would become a vehicle to circumvent Medicaid laws and regulations."

G.E. died on July 1, 1992. At the time of G.E.'s death, V.E. was obligated under G.E.'s admission agreement with the nursing home to pay the $31,444.49 which G.E. owed to the nursing home. V.E. appeals the Director's final decision on behalf of her husband's estate.

Enacted as Title XIX of the Social Security Act, 42 U.S.C.A. § 1396 et seq., Medicaid was established to provide health care to

persons who cannot otherwise afford it. Atkins v. Rivera, 477 U.S. 154, 156-57, 106 S. Ct. 2456, 2458, 91 L. Ed. 2d 131, 137 (1986). If a state chooses to participate in the Medicaid program, it must adopt a state plan which complies with the federal Medicaid Act and the regulations adopted by the Secretary of the Department of Health and Human Services (HHS). 42 U.S.C.A. §§ 1396a, 1396a(a); Schweiker v. Gray Panthers, 453 U.S. 34, 36-37, 101 S. Ct. 2633, 2636, 69 L. Ed. 2d 460, 465 (1981).

New Jersey has elected to participate in the Medicaid program through the enactment of the Medical Assistance and Health Services Act. N.J.S.A. 30:4D-1 to -42. As a result, New Jersey is obligated to provide medical assistance to the "categorically needy." 42 U.S.C.A. § 1396a(a)(10)(A)(i). In addition, New Jersey elected in 1985 to provide assistance to the "medically needy," L. 1985, c. 371, § 1; N.J.S.A. 30:4D-3i(8), an optional class of beneficiaries under federal Medicaid law. 42 U.S.C.A. § 1396a(a)(10)(A)(ii). The "medically needy" are applicants who otherwise satisfy the eligibility requirements for Aid to Families with Dependent Children (AFDC) or Supplemental Security Income (SSI) benefits, but whose income levels make them ineligible for relief under these programs. Atkins v. Rivera, supra, 477 U.S. at 157, 106 S. Ct. at 2458, 91 L. Ed. 2d at 137.

Since G.E. was 74 years old at the time of his application, he was entitled to be considered for "medically needy" benefits. N.J.S.A. 30:4D-3i(8)(a)(iii). However, to qualify for these benefits, he was required to meet a statutory income requirement, N.J.S.A. 30:4D-3i(8)(b)(i), which on the date of his application was a monthly income of less than $1,211.00. 24 N.J.R. 651, 652 (Feb. 18, 1992).

Appellant does not contest the Division's characterization of G.E.'s pension payments as "income" for Medicaid eligibility purposes. See N.J.A.C. 10:71-5.4(a)(3). Appellant also does not dispute that G.E.'s pension of $1,012.67 per month and social security benefits of $895 per month far exceeded the income eligibility limit of $1,211 per month. However, appellant contends

that G.E.'s pension income was not "available" to him after entry of the QDRO requiring that it be paid directly to V.E.

In enacting 42 U.S.C.A. § 1396a(a)(17)(B), Congress did not define the term "available income." Instead, Congress delegated the primary responsibility for defining "available income" to the Secretary of HHS:

A State plan for medical assistance must . . . for determining eligibility for . . . medical assistance under the [Medicaid] plan . . . provide for taking into account only such income . . . as [is], as determined in accordance with standards prescribed ...


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