Lopes v. Department of Social Services

Lopes, a Connecticut resident, filed for Medicaid benefits to provide nursing care for her husband. Federal law required states to consider both spouses’ liquid assets to determine the institutionalized spouse’s Medicaid eligibility. Federal law also required states to exclude from consideration the noninstitutionalized spouse’s income during the time the institutionalized spouse is institutionalized. Federal law further required states to exclude certain assets, such as the spouses’ home and one car. Finally, federal law required that states use criteria to make Medicaid-eligibility determinations that are no more restrictive than the criteria states use to make social-security eligibility determinations. Shortly before Lopes applied for Medicaid benefits for her husband, her liquid assets exceeded the excluded amount by $160,000. To reduce her liquid assets below the excluded amount and thereby qualify for Medicaid, Lopes purchased an annuity with a premium of $166,878.99. The annuity contract provided for monthly payments to Lopes of $2,340.83 and prohibited Lopes from assigning, selling, or pledging the annuity as collateral. The Connecticut Medicaid commissioner denied Lopes’s husband’s application, arguing that the annuity qualified as a liquid asset, not income, because Lopes had used cash to purchase the annuity. Lopes appealed the commissioner’s decision. The district court ruled for Lopes. The commissioner appealed.