Geston v. Olson

Carolyn Geston was married to John Geston (plaintiffs). Carolyn purchased an irrevocable, nonassignable $400,000 annuity. The annuity provided 13 years of fixed, monthly payments of approximately $2,735 to Carolyn. At that time, Carolyn’s life expectancy was slightly more than 13 years. Six months later, John entered a nursing home and applied for Medicaid to cover the nursing-home expenses. The Medicaid asset limit for a spouse institutionalized in a nursing home was $3,000, and the asset limit for the community spouse, i.e., the other spouse who was not in a nursing home, was approximately $110,000. If Carolyn’s annuity did not qualify as an asset, the Gestons’ assets were below their $113,000 combined asset limits, and John would be eligible for Medicaid. Under federal law, the annuity met the requirements to be a Medicaid-qualifying annuity. As a Medicaid-qualifying annuity, federal law considered the annuity to be Carolyn’s separate income, not an asset or other resource that counted toward John’s Medicaid eligibility. However, the State of North Dakota had an additional requirement. Under state law, for an annuity to be considered a community spouse’s separate income, the annuity’s income could not push the community spouse’s monthly income over approximately $4,100. Carolyn had additional monthly income that, when combined with the $2,735 of annuity income, pushed her monthly income over $4,100. Therefore, with the extra state requirement, Carolyn’s annuity did not qualify as Carolyn’s separate income and was considered an asset available to John. Because the annuity’s value pushed the couple’s assets well over their combined Medicaid asset limit, the state’s department of human services (defendant) ruled that John was ineligible for Medicaid. The Gestons sued, arguing that the state law imposing the extra annuity-qualification requirement violated federal law. Both sides filed cross-motions for summary judgment.