Annuity Purchased by Spouse Tarnished in NJ - But is There Light from Other State's Analysis

My colleague Donald D. Vanarelli has a great post at The Law Offices of Donald D. Vanarelli Blog about how Ohio and Massachusetts have taken a different approach to whether or not an Medicaid Qualifying Annuity purchased by a Community Spouse is considered an Available Asset of a Community Spouse.

The Deficit Reduction Act of 2005 (DRA) addresses situations where the purchase of an annuity can be Medicaid Compliant and the value of the annuity not deemed to be an available asset to the Community Spouse.  Regardless, as Don points out:

As I blogged here, the New Jersey appellate court, in N.M. v. Division of Medical Assistance and Health Services, 405 N.J. Super. 353  (App. Div. 2009), certifden., 199 N.J. 517 (2009), held that an annuity purchased for the sole benefit of the community spouse after the effective date of the Deficit Reduction Act of 2005 (DRA) may be considered in determining whether the resources of the institutionalized spouse exceed the resource limit for Medicaid eligibility. This case is one of major importance in the Medicaid estate planning area, and it is a major setback for those trying to help couples protect sufficient assets for the community spouse to live on when the ill spouse is institutionalized. However, based upon recent case law developments in other states, it appears that the New Jersey court’s analysis in the N.M. case may be less persuasive than anticipated. In that regard, courts in Ohio and Massachusetts have recently ruled, contrary to the court in New Jersey, that a community spouse’s annuity purchase is not an improper transfer.

But an Ohio and Massachusetts Court have looked at similar facts and reached different conclusions.  Notably the Ohio appeals court considered and rejected New Jersey's analysis in N.M.:


Significantly, the Ohio appellate court in the Vieth case considered, but refused to follow New Jersey’s N.M. case, instead finding “more reasonable the interpretation and analysis” of the applicable federal statute set forth in the federal district court case entitled Weatherbee v. Richman, 595 F. Supp. 2d 607 (W.D. PA 2009), which held that a post-DRA annuity purchased for the community spouse is exempt for Medicaid eligibility purposes. I blogged about the Weatherbee v. Richmancase here.


Given that the treatment of annuities is set forth in federal law, perhaps these cases will lend weight to a revised interpretation in annuities in New Jersey that is in fact consistent with the law.

Trackbacks (0) Links to blogs that reference this article Trackback URL
Comments (0) Read through and enter the discussion with the form at the end
Post A Comment / Question Use this form to add a comment to this entry.

Remember personal info?