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From Health Law Daily, September 11, 2013
By Kathryn S. Beard, JD
A North Dakota statute classifying a community spouse’s annuity benefit as a resource for determining the institutionalized spouse’s Medicaid eligibility is preempted by federal law because it is more restrictive than the federal eligibility calculation methodology (
Asset classification. Although Medicaid’s “cooperative federalism” design gives states significant flexibility in defining many facets of their systems, state methodologies for determining eligibility must be no more restrictive than the federal methodology employed under the supplemental security income program (
Factual background. John Geston entered a full-time care facility in 2010 while his wife continued living in their home. In November 2011, the Gestons filed an “asset assessment” form with the Burleigh County Social Service Board, which determined that the Gestons’ countable assets exceeded the statutory limit. The Gestons reduced their resources in a number of ways, including Mrs. Geston’s purchase of a single-premium immediate annuity, scheduled to pay her $2,734.65 per month over 13 years. The annuity contract provides that the contract is “irrevocable” and cannot be “transferred, assigned, surrendered, or commuted” during Mrs. Geston’s lifetime; the contract prohibits Mrs. Geston from revoking the recipient of the payment stream. Following the reduction of resources, Mr. Geston applied for Medicaid benefits, and the North Dakota Department of Human Services (NDDHS) denied his application, determining that the portion of the annuity not yet received by Mrs. Geston constituted a countable resource under North Dakota’s Medicaid statute. The Gestons filed suit seeking declaratory and injunctive relief pursuant to
Decision. The 8th Circuit affirmed the district court’s decision, holding that Mrs. Geston’s annuity is unearned income that North Dakota may not count as a resource for the purposes of determining Mr. Geston’s Medicaid benefits eligibility. Mrs. Geston’s annuity is unearned income because payments received as an annuity benefit are part of the statutory definition of unearned income (
The case number is 12-2224.
Attorneys: Gregory C. Larson (Larson & Latham) for John Geston. Stephen A. Feldman (Feldman & Feldman) for Carol K. Olson, Executive Director of the North Dakota Department of Human Services.
Companies: North Dakota Department of Human Services
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