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Name on the Check Rule Annuity Win: Jackson v. Selig

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In May of 2008 Mr. Jackson entered an Arkansas nursing home while his wife, Mrs. Jackson, continued to reside in the community.  In February of 2009 Mr. Jackson purchased two single premium immediate annuities.  One of the annuities was an IRA annuity, and provided monthly payments to Mrs. Jackson under the “name on the check” rule.  Both annuity purchases complied with the Deficit Reduction Act of 2005 (“DRA”).

 

The subsequent application for Medicaid resulted in a determination that Mr. Jackson’s annuity purchases constituted a transfer of resources.  The Arkansas Department of Human Services (“ADHS”) informed Mr. Jackson that his application was denied because: (1) the period of ineligibility imposed for transferring assets for less than fair market value; or alternatively, (2) the period of ineligibility imposed for the diversion of annuity income.

 

Mr. Jackson requested a hearing, which was held before an administrative law judge (“ALJ”).  The ALJ stated that ADHS had erred in penalizing Mr. Jackson, but that he was still ineligible because his resources exceeded the applicable program limit – the annuities were considered countable resources.  Mr. Jackson filed an appeal.

 

Specifically, the ALJ held that the issue of whether Mr. Jackson transferred assets for less than fair market value was moot because an applicant must first be eligible to receive benefits before he or she can even be penalized.  The ALJ alleged that Mr. Jackson was never eligible for benefits due to his ownership of the two annuities.  The ALJ further purported that Mr. Jackson was the owner of the monthly income derived from the annuities, which put him over the applicable monthly income limit for eligibility.

 

It was found that the annuity purchases complied with DRA, therefore could not be considered as assets.  Furthermore, it was found that because the annuity payments were payable to the community spouse, and only income of the institutionalized spouse is considered in determining eligibility, the annuity income cannot be considered by ADHS as income or resources available to Mr. Jackson.

 

In closing, based on the findings of fact and conclusions of law, ADHS was permanently enjoined from assessing a penalty against Mr. Jackson for the purchase of the annuities, and from considering the annuities or their payments as income or resources available to Mr. Jackson in determining his eligibility for Medicaid benefits.

 

Jackson v. Selig (U.S. Dist. Ct., E.D. Ark., No. 3:10-CV-00276-BRW, March 13, 2013)

 

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  1. Avatar Stephen Lacey says:

    I have a crisis plan here in Florida. We are going to do a spousal refusal but the wife is in need of the husband’s income. The husband has a $460,000 IRA that I would like to convert to a Medicaid Compliant annuity but name wife as income recipient. Have you ever created such a plan that worked under a spousal refusal in Florida?

    Thank you for your help.

    BTW – I am a LWP member which is how I know about you guys.

    • Avatar Dale Krause says:

      Thank you for your inquiry, Stephen. It does not appear as though we have used the “Name on the Check Rule” in Florida – successfully, or unsuccessfully. However, several insurance companies will provide a denial clause. Meaning, if an applicant is denied Medicaid benefits the insurance company will refund the premium, less any payments that were made. This feature is advantageous in cases such as this, where a new planning technique is being tested. If you are interested in further details, please call my office.

  2. Avatar Eric Long says:

    I was curious if anyone has tried this in Florida. I notice that Mr. Lacey had a possible case and was hoping he or Mr. Krause had any update on Florida’s take on this type of IRA planning for Medicaid.

    Thanks for any feedback.