HHS States that Income Stream From a Non-Assignable Annuity is Not an Asset

Mrs. Lopes purchased an annuity after her husband began living in a nursing home and received a letter from the annuity company informing her that no part of the annuity was assignable. Mr. Lopes attempted to apply for Medicaid and the state of Connecticut directed Mrs. Lopez to sell the annuity to a potential buyer of the annuity’s income stream. The state denied Medicaid benefits to Mr. Lopez after Mrs. Lopez refused to sell the annuity.

Mr. Lopez appealed and the U. S. District Court of Connecticut held that the annuity was non-assignable and could not be characterized as an asset. The state appealed and the Second Circuit Court of Appeals asked HHS to submit an amicus curiae brief to answer the two following questions: (i) What does the law say? and (ii) What are the policy implications of deciding in favor of Mr. Lopes or the State of Connecticut?

The HHS, in a 19 page response, stated that “there is nothing on its face suspicious, illegal, or otherwise contrary to the policy expressed in the Medicaid provisions of the Social Security Act in treating an irrevocable and non-assignable annuity as the community spouse’s income rather than a resource attributable to the couple.” The HHS concluded that “if the [Second Circuit] determines that Mrs. Lopes’ annuity is non-assignable, the district court’s decision should be affirmed.” 

See In Amicus Brief to Second Circuit, HHS Says an Income Stream from a Non-Assignable Annuity Is Not an Asset, ElderLaw Answers, Jan. 3, 2012.