In response to a recent New Jersey Administrative Law decision, New Jersey’s Medicaid agency held that a Medicaid applicant who made a substantial gift and purchased an annuity to help pay for the resulting ineligibility period will be eligible for benefits. M.W. v. Division of Medical Assistance and Health Services (N.J. OAL Docket No. 2998-2013, Jan. 28, 2014).

A nursing home resident purchased an irrevocable, actuarially sound, non-assignable annuity for $80,010.58. The annuity named the State of New Jersey as the remainder beneficiary. The resident also gifted $43,190.53 to her son. She applied for Medicaid, and the State denied her application. Initially, the State reasoned that because she made the resources unavailable by purchasing an annuity, the annuity was an available resource to her.

The resident appealed and requested a fair hearing which is the process to challenge a denial from the County Board of Social Services. The administrative law judge (ALJ), at fair hearing, reversed the denial of the Medicaid application, finding that the annuity was not an available resource because it could not be converted into cash.

The Director of the Division of Medical Assistance and Health Services affirmed the ALJ’s decision finding that under State law, the annuity is not an available resource.

This presents our clients with a unique opportunity to engage in asset protection strategies in order to preserve assets for future generations without depleting life savings to pay for long term care services.  If you are concerned with the high cost of long term care and would like a consultation to review your options, please feel free to call attorney Charles Bratton for a consultation at 856-857-6000 or fill out our online contact form.