## Facts

- John F. Lopes entered a nursing facility in Connecticut; his wife, Amelia F. Lopes, acting as his attorney-in-fact, applied for Medicaid coverage of his institutional care.
- Before applying, the couple held liquid assets exceeding the protected amount by about $160,000.
- To reduce countable resources, Amelia purchased a single-premium immediate annuity for $166,878.99 that paid her $2,340.83 monthly for six years.
- The annuity contract included an anti-assignment clause barring sale, assignment, or pledging of the right to receive payments.
- Connecticut’s Department of Social Services treated the annuity payment stream as an available “resource,” reasoning the stream could potentially be sold despite the anti-assignment clause, and denied Medicaid eligibility.
- Lopes challenged the denial in federal court, asserting the payments were the community spouse’s income and could not be deemed available to the institutionalized spouse during institutionalization.

## Issues

1. Whether a non-assignable annuity payment stream payable to a community spouse constitutes a countable “resource” for Medicaid eligibility.
2. Whether treating that payment stream as a resource impermissibly applies Medicaid eligibility criteria more restrictive than Supplemental Security Income standards under 42 U.S.C. § 1396a(a)(10)(C)(i).
3. Whether the MCCA’s rule that community-spouse income is not deemed available to the institutionalized spouse requires classification of the stream as income rather than a spend-down resource.

## Decision

- The Second Circuit affirmed summary judgment for Lopes.
- The court held the annuity payment stream was not a countable resource because, under SSI-linked standards, a resource requires a legal right or power to liquidate.
- The anti-assignment clause prevented Amelia from transferring or liquidating the payment stream; the possibility of a hypothetical market transaction did not create a legally available resource.
- The court treated the payment stream as income to the community spouse that could not be deemed available to the institutionalized spouse during institutionalization under 42 U.S.C. § 1396r-5(b)(1).
- The court agreed that Connecticut’s approach was more restrictive than SSI criteria, violating the federal “no more restrictive” requirement.

## Legal Principles

- For Medicaid categories tied to SSI methodology, states may not employ eligibility standards more restrictive than SSI. 42 U.S.C. § 1396a(a)(10)(C)(i).
- Under SSI rules, an item is a countable resource only if the applicant has the legal right, authority, or power to liquidate it; lack of legal transferability defeats resource status.
- A contractually non-assignable annuity payment stream is not a countable resource when the beneficiary lacks a legal right to sell or assign the stream, even if the stream might have economic value.
- During institutionalization, a community spouse’s income is not deemed available to the institutionalized spouse for Medicaid eligibility purposes. 42 U.S.C. § 1396r-5(b)(1).
- Agency interpretations by HHS consistent with the statutory and regulatory scheme may be given substantial weight in construing Medicaid eligibility classifications.

## Conclusion

The Second Circuit held that Connecticut could not deny Medicaid by treating a community spouse’s non-assignable annuity payment stream as a countable resource; under SSI-linked rules and the MCCA’s spousal-income protection, the stream was income to the community spouse and not available to the institutionalized spouse.


Lopes v. Dep’t of Soc. Servs., 696 F.3d 180 (2d Cir. 2012)