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Court decides income stream from annuity cannot be considered an available asset

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The U.S. Court of Appeals for the Second Circuit upheld a district court ruling that Connecticut cannot treat the income stream from an annuity as an available asset for determining Medicaid eligibility.  DHSH required the well spouse to sell the annuity and use the money to pay for the ill spouse’s cost of care –the well-spouse refused and took DHSH to court.  The couple’s argument: that the spouse of a Medicaid applicant can have an unlimited amount of income, regardless of when the income stream began.  In this case, the well spouse had purchased an annuity immediately before applying for Medicaid for the ill spouse.  Both the District courts and the US Court of Appeals for the Second Circuit held that a payment stream from a non-assignable annuity is not a resource for Medicaid purposes.  The U.S. Department of Health and Human Services (HHS) noted that the ruling was supportive of provisions in Medicaid statute designed to protect community spouses from impoverishment.  If you’re in a situation where DHSH is asking for something that the law doesn’t allow them to require, working with an elder law attorney will help protect your rights and allow you and your family the benefits for which they are eligible.

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