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A recent court case, Hutcherson v. Arizona Health Care Cost Containment System Administration ("AHCCCS"), brought a ruling down regarding the State's recovery rights as a beneficiary of a Medicaid Compliant Annuity. Within the decision: "We hold that the 2006 amendment to 42 U.S.C. § 1396p(c)(1)(F)(i) creates a right in the State to recover as a remainder beneficiary against a community spouse's annuity for an institutionalized spouse's medical costs. We further hold that the State's recovery is not limited to the amount paid for the institutionalized spouse's medical costs as of the date of the community spouse's death." In light of the above, should the community spouse predecease a Medicaid Compliant Annuity wherein the state is designated as a primary beneficiary and the state elects to continue the monthly payments, the state can simply continue to recover as long as the payments are being made and the institutionalized spouse is receiving Medicaid benefits. Some time ago I sent a brief survey to each state Medicaid agency to inquire specifically as to each states' Medicaid claim amount, and if it ends on the date of death of the community spouse. Over 60% of the states that responded replied with a yes - the Medicaid recovery claim amount ends on the date of death of the community spouse. There were a handful that said no - the Medicaid recovery claim amount continues as long as the payments are being made and the institutionalized spouse is receiving Medicaid benefits. This situation is exactly why it is best to be as specific as possible in beneficiary designations, especially those for annuities owned by community spouses. Take for example a Wisconsin case where a community spouse purchases a Medicaid Compliant Annuity. I would recommend that the spouse make the following primary beneficiary designation, assuming a minor and/or disabled child is not involved in the scenario: "The Wisconsin Department of Health Services Estate Recovery Program for the total amount of medical assistance paid on behalf of the institutionalized individual, namely [institutionalized spouse's full legal name]. The primary beneficiary's claim amount ends on the date of death of the owner, namely [community spouse's full legal name]." Such language would ensure that the state's claim amount does not continue to run past the date of the death of the community spouse. A vague designation, such as "State of Wisconsin" could leave a potential Medicaid recovery nightmare in the event of a community spouse's premature death. What government agency is entitled to collect? Who is the claim amount based on? To what extent of the residual balance is the beneficiary entitled to?
Related Articles -
Court Decisions, Medicaid Compliant Annuities, Medicaid Compliant Products, Medicaid Planning, Deficit Reduction Act,
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