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In the recent case of In The Matter of Leon Schneider (N.Y. App. Div., 2 Dept., 2010 NY Slip Op 00971, Feb. 9, 2010), a New York appeals court ruled that the estate of Mr. Schneider must repay the state for the amount of Medicaid benefits provided on behalf of his wife, but only up to the amount of countable resources that he possessed above his community spouse resource allowance ("CSRA"), and by the amount that his monthly income exceeded his monthly maintenance needs allowance ("MMNA").  See the note below.  At the time of Mrs. Schneider's Medicaid application, Mr. Schneider's countable resources exceeded his CSRA by $268,048, and his monthly income contribution amount was $157.80.  As a result of the court ruling, the New York Department of Health was paid $279,883.

In light of the above, it is my opinion that had Mr. Schneider opted to use a Medicaid Compliant Annuity, rather than just say "no," the economic results would have been much more favorable to him and his intended beneficiaries.  From the case facts, I know that from June 10, 1996, to October 3, 2002 - 75 months, Mrs. Schneider received Medicaid benefits valued at $386,382.77.  I also know that Mr. Schneider died on October 3, 2002, and Mrs. Schneider died after him, on December 3, 2003.

Not knowing Mr. Schneider's date of birth, I assumed if he was 80 years of age at the time of Mrs. Schneider's Medicaid application, based on the current life expectancy tables published by the Chief Actuary of the Social Security Administration, he had a Medicaid life expectancy of 7.62 years/91.44 months.  Also, with an investment amount of $268,048, Mr. Schneider's Medicaid Compliant Annuity would have paid him $3,059.38 per month for 91 months.  As a result of purchasing the Medicaid Compliant Annuity, Mr. Schneider's spend-down amount was totally eliminated.  However, in that Mr. Schneider's monthly income was further in excess of his MMNA he would have to contribute $764.84 each month towards Mrs. Schneider's cost of care.  Over the course of the aforementioned 75 months, Mr. Schneider's total out-of-pocket expense would have reached $57,363.  This amount is substantially less than $279,883.

As such, it appears that a New York Medicaid Compliant Annuity in a community spouse case can have a distinct economic advantage over just saying "no," not to mention the avoidance of legal pleadings, discovery, and years of court hearings.

Note: In New York, if a community spouse has monthly income in excess of his or her MMNA, they are required to contribute 25% of the excess amount towards the institutionalized spouse's monthly cost of care.