Disclaimer: With Medicaid, VA, and insurance regulations frequently changing, past blog posts may not be presently accurate or relevant. Please contact our office for information on current planning strategies, tips, and how-to's.
In a recent case out of Massachusetts, a trial court held that MassHealth must be named the primary beneficiary on annuities purchased by the community spouse of a Medicaid applicant. Prior to this decision, practitioners relied on the Dermody decision to avoid naming the state as a beneficiary on Medicaid Compliant Annuities in Massachusetts as long as the transfer was for the sole benefit of the community spouse. Therefore, married couples seeking Medicaid benefits for the institutionalized spouse could avoid estate recovery altogether. (Read more about that case here.) Now, Massachusetts practitioners may need to adjust their Medicaid planning strategies accordingly.
An Overview of the Case: American National Insurance Co. v. Breslouf
After Suzanne Breslouf moved into a nursing home in 2017, her husband Julius spent down their excess countable assets by purchasing a MassHealth Compliant Annuity. He named MassHealth the primary beneficiary up to the extent of benefits paid on behalf of Suzanne. The couple’s daughter, Jennifer, was named contingent beneficiary.
When Julius passed away in 2020, Jennifer made a claim to the annuity, as did MassHealth. Jennifer made the case that the annuity was for the sole benefit of Julius, so the provision requiring the state to be named a remainder beneficiary should not apply. The Massachusetts Superior Court sided with the state, arguing that naming a third party as beneficiary would allow the community spouse to potentially shelter those assets without limitation, which would directly oppose the purpose of the sole benefit rule.
How Does This Decision Affect Massachusetts Practitioners?
The main impact of this update is the risk of estate recovery on annuities purchased by the community spouse. In order to combat this, practitioners can recommend their clients use shorter terms on these annuities to reduce the risk of the state recovering against the annuity in the event the community spouse predeceases the term.
When you work with Krause Financial Services, you have access to multiple annuity carriers nationwide, including A-rated companies and carriers in Massachusetts that offer terms as low as 2 months. In addition to reducing the risk of estate recovery, a shorter term allows the community spouse to receive the annuity funds more quickly and continue living comfortably in the community.
Read More: How to Choose an MCA Carrier
If you have questions about this recent case decision or are interested in learning more about annuity options in Massachusetts, contact our team today!
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