Pennsylvania – Community Spouse Court Decision – Weatherbee
POSTED ON - March 4, 2018
Written By Krause Financial Services
Pennsylvania Community Spouse Court Decision – Weatherbee
In 2006, I worked with a Pennsylvania elder law attorney who had a Medicaid case involving a husband and wife, the Weatherbees. The institutionalized spouse, Mr. Weatherbee, entered a nursing home in September of 2006, and was expected to remain there indefinitely. After a resource assessment, Mrs. Weatherbee wanted to qualify her husband for Pennsylvania Medicaid benefits.
In order to eliminate the spend-down amount, pursuant to my suggestion, Mrs. Weatherbee purchased a Medicaid Compliant Annuity (“MCA”) from Jefferson-Pilot Life Insurance Company. The MCA was structured over Mrs. Weatherbee’s Medicaid life expectancy.
With the spend-down amount eliminated, Mr. Weatherbee submitted a Medicaid application in February of 2007. After reviewing the Medicaid application, the Pennsylvania Department of Public Welfare (“DPW”) determined that Mrs. Weatherbee’s MCA was an available resource, in that the income stream could be sold on the secondary market. Despite the fact that the MCA’s endorsement page clearly precluded such a sale, DPW’s postion was sustained.
Based on the legal argument that DPW’s postion was contrary to federal law, the case proceeded to the United States District Court, Western District of Pennsylvania. In January of 2009, the Court decided that DPW’s postion was contrary the intent of the federal law, and DPW’s motion to dismiss the Weatherbee’s case was denied. The Court further determined that Mr. Weatherbee was entitled to receive Medicaid benefits.
When I sold the MCA in the Weatherbee case, I was confident that it met the requirements of the Deficit Reduction Act of 2005, and that it could not be sold on the secondary market. With the recent decision, the case was a great win! It is just too bad that it took 26 months to resolve the Medicaid storm, which is a long time for any family to endure.
With the Weatherbee decision in place, I believe that it will open doors for the use of more nonqualified MCA’s in community spouse cases – wherein the entire spend-down amount is protected for the community spouse, especially in those states having restrictions, including, but not limited to: Alabama, Colorado, Ohio, and Utah.
To read the complete court decision, please read Weatherbee District Court Decision.