Court Upholds Creative Medicaid Planning Technique

The court in Morenz v. Wilson-Coker, No. 04-4107-CV, 2005 WL 1648804 (2nd Cir. July 14, 2005), authorized a creative (or devious, depending on your philosophy) approach to Medicaid planning.

Husband was in a nursing home and desired to qualify for Medicaid benefits.  However, Husband and Wife had significant assets (over $150,000).  So, they took the following steps.

First, Husband gave to the State of Connecticut all of his rights to be supported by Wife.

Second, Wife executed a statement stating that she refused to support Husband.

They then claimed that “pursuant to the provisions of the Medicare Catastrophic Coverage Act of 1988 (“MCCA”), 42 U.S.C. § 1396r-5(c)(3)(A), such assignment immunizes the community spouse’s assets from consideration in calculating the institutionalized spouse’s initial Medicaid eligibility.”

Connecticut wanted to ignore these maneuverings designed to qualify Husband for Medicaid benefits.

But, both the trial and appellate courts explained that Husband and Wife had followed the requirements of federal and state law and thus Husband qualified for benefits despite the couple’s significant assets.

For an interesting discussion of the ramifications of this case, see G.M. Filisko, Medicaid Family Can Hold on to More Assets: 2nd Circuit Ruling May Bring Backlash From Cash-Strapped States, ABA J. e-Report, Aug. 12, 2005.