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A recent case before the Idaho Department of Health and Welfare resulted in a favorable decision for the elder law community. The issue at hand was whether the brokerage fee that was paid by the Medicaid applicant to purchase a Medicaid Compliant Annuity (MCA) could be considered an asset transfer for less than fair market value. With the help of expert witness testimony provided by our own Dale Krause, J.D., LL.M, the Court reversed the Department’s decision and ruled in favor of the Appellant. Read the full decision.
Upon seeking Medicaid benefits, the Department determined that the Appellant’s resources exceeded the eligibility limit. As such, the Community Spouse purchased a Medicaid Compliant Annuity through our office for $22,000 to be distributed over a 3-month term. This resulted in a $2,000 brokerage fee that was also owed to Krause to facilitate the sale and provide back-office support to the agent and their client. However, the Department considered this fee a transfer for less than fair market value and assessed the Appellant a 6-day transfer penalty.
The Appellant asserted that the Department overstepped its authority by adding requirements to the IDAPA 16.03.05.838.03 when assessing the 6-day penalty to the $2,000 brokerage fee. The Department argued that since the financial return of the MCA was not at least equal to the amount of the brokerage fee, payment of the brokerage fee was an asset transfer subject to a penalty.
In their review of the evidence, the Court determined that the record contained credible evidence that the brokerage fee paid by the Appellant was comparable to what other agencies would charge for offering such a product. Furthermore, the testimony provided by Dale Krause, recognized as an expert witness, held great weight with the Court in understanding the purpose of the fee and the value being provided by the brokerage service.
The purchase of this product from Krause is a result of years of research and development by Dale Krause and includes oversight of the insurance agent’s activities, multiple reviews of the annuity application, and coordinating with the independent agent. As such, the brokerage fee of $2,000 is more than “reasonable” for the asset.
The Court reversed the Department’s decision, concluding that the Respondent failed to provide adequate evidence showing that payment of the $2,000 brokerage fee was for less than fair market value. As such, the Appellant should not be subject to an asset transfer penalty associated with the annuity brokerage fee.
While it is rare, sometimes Medicaid applications can be wrongfully denied. If your client’s Medicaid application is denied as a result of purchasing a product from our office, it is best to immediately contact our in-house attorneys as soon as possible. We’ll review the case facts and provide advice for resolving the denial with the caseworker. If the denial results in a fair hearing, we will guide you through the entire process at no charge to you and your client, including providing expert testimony.
To learn more about how to set yourself up for success in the event of a Medicaid denial, download our ‘Medicaid Denial and Fair Hearing Guide’ or contact our office and speak with one of our Benefits Planners today!