An income stream from an annuity is not an available asset for the purposes of Medicaid eligibility.

The U.S. Court of Appeals for the
Second Circuit upholds a district court ruling that Connecticut cannot
treat the income stream from an annuity as an available asset for the
purposes of Medicaid eligibility. Lopes v. Dept. of Social Services (2nd Cir., No. 10-3741-cv, Oct. 2, 2012).

After John Lopes moved to a nursing
home, his wife, Amelia, purchased an annuity. She received a letter from
the annuity company stating that no part of the annuity was assignable,
including periodic payments. Mr. Lopes applied for Medicaid. The state
identified a potential buyer of the annuity's income stream and directed
Mrs. Lopes to attempt to sell the annuity. When Mrs. Lopes refused, the
state denied Medicaid benefits to Mr. Lopes.

Mr. Lopes appealed, arguing Mrs.
Lopes was not legally obligated to sell the annuity's income stream. The
state ruled that Mrs. Lopes' annuity was an available asset, and Mr.
Lopes appealed to the court.

The U.S. District Court for the District of Connecticut granted Mr. Lopes's motion
for summary judgment, ruling that the state could not treat the income
stream from an annuity as an available asset for the purposes of
Medicaid eligibility. Connecticut appealed. 

The U.S. Court of Appeals for the
Second Circuit affirms the district court, holding that the payment
stream from a non-assignable annuity is not a resource for purposes of
determining Medicaid eligibility.  The court goes on to rule that it
is irrelevant that the annuity was purchased just prior to Mr. Lopes’
application for Medicaid benefits. The court notes that its decision was
influenced by the views, which it solicited, of the U.S. Department of
Health and Human Services (HHS).  The HHS urged the Second Circuit to accept Mrs. Lopes’ position, which it
said was consistent with Medicaid’s primary purposes of providing health
care to the indigent and protecting community spouses from
impoverishment.

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