## Facts

- N.M., a nursing-home resident, privately paid for care and later applied for New Jersey Medicaid after spending down marital assets.
- N.M.’s husband, A.M. (the community spouse), used marital assets to purchase a commercial annuity shortly before the Medicaid application.
- The annuity paid periodic amounts to A.M. and identified him as the sole payee/beneficiary, but the right to receive future payments could be sold on a secondary market for a lump sum.
- The county welfare agency calculated the couple’s resources as of the federal “snapshot” date (institutionalization) and applied New Jersey’s community spouse resource allowance (CSRA) and the institutionalized spouse’s $2,000 resource cap.
- The agency treated the annuity’s payment stream as having a market value (about $90,000) and included that value in countable resources, leaving the couple over the asset limit; N.M.’s application was denied.
- An ALJ upheld the denial, and the state Medicaid agency (DMAHS) adopted the ALJ’s decision as its final agency action.

## Issues

1. Whether the market value of a commercial annuity’s future-payment rights, purchased with marital assets for the sole benefit of the community spouse and saleable on a secondary market, is a countable Medicaid resource in determining the institutionalized spouse’s eligibility.
2. Whether counting that annuity value as a resource is consistent with federal spousal-impoverishment rules, including the bar on deeming a community spouse’s income available to the institutionalized spouse.

## Decision

- The Appellate Division affirmed the final agency decision denying Medicaid.
- The court held that the annuity’s future-payment rights, to the extent saleable for cash, could be treated as a countable resource in the eligibility determination.
- The court concluded that classifying the annuity’s market value as a resource did not violate the federal rule protecting the community spouse’s income from attribution to the institutionalized spouse.
- The court deferred to the agency’s reasonable interpretation of the Medicaid statutes and regulations in a complex administrative area.

## Legal Principles

- In Medicaid eligibility, an asset is generally a countable resource if it can be converted to cash for support and maintenance, including transferable legal rights with market value.
- Federal spousal-impoverishment law requires counting spouses’ non-exempt resources as of institutionalization, subject to allocation of a CSRA to protect the community spouse.
- Federal law prohibits deeming a community spouse’s income available to the institutionalized spouse, but that protection does not prevent treating a saleable underlying asset that generates payments as a resource.
- Agencies may treat transactions that preserve saleable capital while seeking Medicaid coverage as inconsistent with Medicaid’s payer-of-last-resort function, and courts typically give substantial deference to reasonable agency interpretations.

## Conclusion

The court upheld New Jersey’s denial of Medicaid because the community spouse’s annuity payment stream had a realizable market value and could be counted as a resource, leaving the couple over the applicable asset limits despite CSRA protection.


N.M. v. Div. of Med. Assistance & Health Servs., 405 N.J. Super. 353, 964 A.2d 822 (App. Div. 2009)