State Able to Recover Medicaid Expenses From Husband’s Annuity For Benefits Incurred After His Death

Betty Hutcherson, and Arizona resident, entered a nursing home. In an effort to qualify for Medicaid, John purchased an annuity that listed the state and Hutcherson’s daughter, Rebecca, as primary and secondary beneficiary, respectively. According to 42 U.S.C. § 1396p(c)(1)(F), an annuity that names the state as a primary remainder beneficiary “for at least a total amount of medical assistance paid on behalf of the institutionalized individual” is not a transfer of an asset for below-market value. When John died, the state had paid $23,840.51 for Betty’s care and the annuity had $75,000 left.

In a claim filed in federal court in Arizona, Rebecca asked the court to declare that the state’s ability to recover from the annuity was limited to the amount the state had paid up to the point of John’s death. After the court granted the state’s request for summary judgment, Rebecca appealed.

In Hutcherson v. Arizona Health Care Cost Cont. Syst. Adm. (U.S. Ct. App., 9^th Cir., Jan. 27, 2012), the U.S. Court of Appeals for the Ninth Circuit affirmed the lower court’s holding, finding that the state had the ability to recover from the annuity Medicaid expenses incurred after John’s death.

See State Can Recover From Spouse’s Annuity for Medicaid Benefits Paid After Spouse Died, Elder Law Answers, Jan. 30, 2012.