Medicaid Annuity Cases on Appeal in Massachusetts

In American National Life Insurance Company v. Breslouf (Mass. Super. 6/3/2021), a Community Spouse named Julius Breslouf purchased a Medicaid annuity as part of the plan to secure Medicaid eligibility for his wife. The annuity named the Commonwealth of Massachusetts as the remainder beneficiary, followed by his daughter, Jennifer Brouslouf. Mr. Breslouf died before the annuity term ended and both the Commonwealth and Jennifer filed a claim for the remaining proceeds.

American National filed an interpleader action to determine who was entitled to the remaining annuity proceeds, approximately $270,000. The Commonwealth filed a motion for summary judgmenta dn Jennifer filed a cross motion. The Court framed the issue as whether an annuity purchased to qualify for Medicaid “must satisfy both 42 U.S.C. §§ 1396p(c)(1)(F) and 1396p(c)(2)(B)(1), or only § 1396p(c)(2)(B)(1).”

Relying heavily on Huterson v. Arizona Health Care Cost Containment Sys. Admin, 667 F.3d 1066 (9th Cir. 2012), the Court found the Commonwealth was entitled to recover as primary remainder beneficiary of the annuity. Specifically, the Court found “[a]fter careful review, I agree with the Commonwealth that the 2006 amendment to the DRA was intended to allow states to reach community spouse annuities and, therefore, community spouse annuities must comply with 42 U.S.C. § 1396p(c)(1)(F)(i)…. Permitting a community spouse to purchase an annuity—thus spending down assets to create Medicaid eligibility for the institutionalized spouse—but name a third party as the beneficiary of the annuity in the event the community spouse’s death would allow the community spouse potentially to shelter those assets without limitation, a result directly contrary to the purposes of the MCCA and the DRA.” The Court noted that even if wrong on statutory interpretation, Julius designated the Commonwealth as the primary remainder beneficiary.

The result in this case is substantially similar to Cook v. Glover. However, there was a joint petition for appeal which appears below.

See also Dermody v. The Executive Office of Health and Human Services, Superior Court of Middlesex, Massachusetts (1781CV02342 1/16/2020)