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From Health Law Daily, August 12, 2013

Medicaid agency may recover nursing home expenditures from estate of surviving spouse

By Michelle L. Oxman, JD, LLM

A Marital Settlement Agreement (MSA) executed to reach Medicaid eligibility did not transmute community property into separate property for purposes of estate recovery after the death of the beneficiary (In re: Estate of Wiggins, August 9, 2013, Jones, W). The definition of “assets” in Soc. Sec. Act sec. 1917(h) includes interests held by the spouse of a beneficiary. In addition, Soc. Sec. Act sec. 1917(b)(4)(B) allows the state to expand the definition of “estate” to include property in which an individual had any interest at the time of death, including any interest conveyed pursuant to joint tenancy or “other arrangement.” The state exercised this option by enacting Idaho Code sec. 56-218(4), and Idaho code sec. 56-218(1) permitted the Medicaid agency to recover expenditures made for medical assistance to an individual over age 55 from the estate of the surviving spouse at his or her death. Therefore, the judgment below was reversed.

The couple’s history. Vivian Wiggins entered a nursing facility in 2002 and began to receive Medicaid in 2003. In order to become eligible for Medicaid, Vivian and her husband, Emerson, entered into a Marital Settlement Agreement under which she retained $3,000 and he retained the rest of their community property. When she died in 2009, the Medicaid agency had spent more than $272,000 for her care. Emerson died less than two weeks later, and a joint estate was opened.

The personal representative denied the Medicaid agency’s claim on the ground that the agency’s lien could not reach the husband’s separate property. The magistrate agreed. On review, a district court judge ruled that the state agency must void the MSA in order to reach the assets of the surviving spouse. The district court based its ruling, in part, on the apparent deletion of a Medicaid regulation that provided that transfers under MSAs could be voided if they were not supported by adequate consideration.

Arguments on appeal. The estate argued first that under Idaho code sec. 32-916, the MSA transmuted the couple’s community property into the husband’s separate property. In addition, it argued that Idaho code sec. 56-218(1) did not allow the state to reach property of the husband’s estate because it did not define “estate.”

Transmutation of community property. The Idaho Supreme Court found that section 32-916 conflicted with section 56-218. The court ruled that section 32-916 applied for purposes of Medicaid eligibility but did not affect agency’s claim against the estate of the surviving spouse. Because section 56-218 was both more specific and the later-enacted statute, it controlled.

The expanded estate. A 1998 amendment to section 56-218 added the definition of “estate.” The state regulation had not been deleted, but renumbered as Rule 16.03.09.905.01, and it was effective to include the property transferred pursuant to the MSA in the beneficiary’s estate for purposes of estate recovery.

The docket number is 39129, and the opinion number is 2013 Opinion No. 85.

Attorneys: Lawrence G. Wasden, Idaho Attorney General, for State of Idaho Department of Health & Welfare.

Companies: State of Idaho Department of Health & Welfare

MainStory: TopStory CaseDecisions EligibilityNews MedicaidPaymentNews IdahoNews

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