N.M. v. Division of Medical Assistance and Health Services

N.M. (plaintiff) resided at King Manor Care Center (King Manor), a New Jersey nursing home. N.M.’s husband, A.M., was not in institutional care. Initially, N.M. paid privately for her care at King Manor. However, after spending down significant assets paying for healthcare costs, N.M. applied for Medicaid benefits. Shortly before N.M. applied for Medicaid benefits, A.M. purchased a commercial annuity with an income stream for which A.M. was the sole beneficiary. Although the annuity itself was nontransferable, A.M. could sell the annuity’s income stream on the secondary market. The Monmouth County Board of Social Services (board) (defendant) denied N.M.’s Medicaid application, holding that N.M. and A.M. collectively had countable resources totaling approximately $195,000 after deducting A.M.’s community spouse resource allowance (CSRA), which was nearly double New Jersey’s Medicaid asset limit. The board included A.M.’s annuity income stream as a countable resource after determining that the market value of the annuity’s income stream was approximately $90,000. N.M. appealed the denial. The administrative-law judge (ALJ) affirmed the board’s denial, holding that N.M. and A.M. needed to spend down their collective assets below the Medicaid asset limit before N.M. could qualify for Medicaid. N.M. appealed, arguing that the market value of A.M.’s annuity income stream should not have been counted toward her Medicaid asset limit because a community spouse’s income was not considered an available asset to an institutionalized spouse for Medicaid eligibility purposes.