On appeal from the Department of Human Services, Division of Medical Assistance and Health Services.
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 2, 2008
Before Judges Skillman, Graves and Grall.
When one member of a married couple enters a nursing home (commonly called the "institutionalized spouse"), the applicable federal Medicaid statutes and regulations require the assets of both that spouse and the spouse who continues to live at home (commonly called the "community spouse") to be taken into account in determining whether the institutionalized spouse's "countable resources" exceed the maximum allowed for Medicaid eligibility.*fn1 42 U.S.C.A. § 1396r-5(c)(2). To assure that the community spouse will be able to meet his or her own needs, a portion of the couple's assets is reserved for the community spouse's benefit. 42 U.S.C.A. § 1396r-5(d)(2).
To determine this amount, called the "community spouse resource allowance" (CSRA), the total of all of the couple's assets, whether owned jointly or separately, is calculated as of the date of the institutionalized spouse's institutionalization.
42 U.S.C.A. § 1396r-5(c)(1)(A)(i). One half of this total is then allocated to each spouse. 42 U.S.C.A. § 1396r-5(c) (1)(A)(ii). The one-half share allocated to the community spouse is subject to a ceiling, see 42 U.S.C.A. § 1396r-5(f)(2)(A); 42 U.S.C.A. § 1396r-5(g), which was $99,540 in New Jersey when the Medicaid application involved in this appeal was filed. N.J.A.C. 10:71-4.8. This amount is the CSRA, which is considered unavailable to the institutionalized spouse in determining his or her eligibility for Medicaid.*fn2 However, all resources above the CSRA, excluding a small sum set aside for the institutionalized spouse, which was $2,000 when the Medicaid application involved in this appeal was filed, N.J.A.C. 10:71-4.5(c), must be spent before the institutionalized spouse can satisfy the resource limit required for Medicaid eligibility.
42 U.S.C.A. § 1396r-5(c)(2); see generally Wisc. Dept. of Health & Family Servs. v. Blumer, 534 U.S. 473, 481-82, 122 S.Ct. 962, 967-69, 151 L.Ed. 2d 935, 944-46 (2002).
The issue presented by this appeal is whether the state agency responsible for administering the Medicaid program, which in this State is the respondent Division of Medical Assistance and Health Services, N.J.A.C. 10:71-1.5, may consider the value of an annuity purchased for the sole benefit of the community spouse in determining the institutionalized spouse's eligibility for Medicaid. We conclude that under an amendment to the federal Medicaid statutes contained in the Deficit Reduction Act of 2005, 120 Stat. 4, such an annuity may now be considered in determining Medicaid eligibility.
The appellant, N.M., entered King Manor Care Center, a nursing home, as a private pay patient in December 2004. N.M.'s husband, A.M., remained in the couple's marital residence in Oceanport, New Jersey. When N.M. entered the nursing home, she and A.M. had bank accounts and other investments with a total value of $311,051.83.
On July 5, 2006, an application was made on N.M.'s behalf for Medicaid Only eligibility, effective July 1, 2006. Two weeks before this application, A.M. used $131,500 of the couple's assets to purchase a commercial annuity, under which he is entitled to receive monthly payments of $2,917 for forty-eight months. A.M. is the sole beneficiary of this annuity, which is non-assignable and nontransferable. However, if A.M. dies before all the payments are made, the State will become the remainder beneficiary to the extent of any Medicaid benefits paid on N.M.'s behalf and the balance of the annuity will be payable to A.M.'s estate.
Respondent Monmouth County Board of Social Services (Board) denied N.M.'s application for Medicaid Only benefits on the ground that she and A.M. had "available resources" that exceeded the maximum amount allowed for eligibility. In making this determination, the Board took into account the value of the income stream from the annuity purchased by A.M. The Board found that N.M.'s and A.M.'s countable resources at the time of the application, including the value of the income stream from the annuity, totaled $194,818, and that after deducting the $99,540 CSRA protected for A.M. as the "community spouse" and the $2,000 ...