(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued March 3, 1998 -- Decided June 8, 1998
STEIN, J., writing for a unanimous Court.
The issue before the Court is whether an individual retirement account (IRA) in the name of a
husband must be included as a resource for purposes of determining his wife's Medicaid eligibility when the
wife enters a nursing home but the husband remains in the community.
Sophie Mistrick and Joseph Mistrick were married in 1952. In October 1994, Sophie was admitted
into Wayne View Convalescent Center. At the time of Sophie's institutionalization, the couple owned assets
that included a Vanguard IRA in Joseph's name. In April 1995, Joseph retired from work. The company
he worked for established a GAFCAP 401(k) program that Joseph used as a retirement account. As a
condition of his retirement, Joseph rolled over the GAFCAP 401(k) into his existing Vanguard IRA account.
In August 1995, Joseph applied on Sophie's behalf to the Passaic County Board of Social Services
(Board) for institutional Medicaid benefits. Prior to applying for those benefits, Sophie and Joseph
conducted a private resource “spend-down” that substantially diminished their net worth. Joseph retained
the house; a community spouse resource allowance, as provided for under the Medicaid regulations; and his
Vanguard IRA. The Board denied Sophie's Medicaid application, concluding that she was ineligible for
Medicaid benefits because Joseph's IRA was an includable resource for the purpose of determining
Medicaid eligibility and that Sophie's available resources exceeded the $2,000 eligibility limit.
Sophie requested a hearing before the Division of Medical Assistance and Health (Division) to
contest the denial of Medicaid benefits. The matter was referred to the Office of Administrative Law. After
a plenary hearing, the Administrative Law Judge (ALJ) concluded that Joseph's 401(k), which was rolled
over into the IRA, was not an available resource and, therefore, should not have been included in the
determination of Medicaid eligibility. In her final decision, the Director of the Division adopted the ALJ's
findings of fact but concluded that Joseph's IRA was an includable resource for the purpose of determining
Sophie's Medicaid eligibility.
Sophie appealed the Director's decision. The Appellate Division reversed and remanded the matter
for calculation of the couple's resources without including Joseph's IRA. In reviewing the Medicaid System,
the court noted that State participation in the Medicaid program requires compliance with Title XIX of the
Social Security Act (the Act). The Act provides that participating states must make assistance available to
the “categorically needy,” defined as persons receiving categorical aid, such as Aid to Families with
Dependent Children (AFDC) and Supplemental Security Income (SSI). The Act also authorizes states to
provide assistance to other classifications of needy persons, including those persons whose income and
resources are too low to meet their medical expenses but too high to qualify them for cash assistance under
SSI or AFDC. This group is known as the “medically needy.” New Jersey is a participating state.
In determining income and resource eligibility for medically needy individuals, the methodology used to determine eligibility under the Act must be “no more restrictive” than the methodology used under the SSI program. The Appellate Division found that pursuant to the “no more restrictive” provision, assets that may not be included by the State for determining resource eligibility for SSI also may not be included by the State for determining resource eligibility for medically-needy participants. For purposes of SSI, pension plans and IRAs in the name of the spouse of the person seeking medical assistance is specifically excluded from
consideration in the eligibility determination. The Appellate Division held that the State is precluded from
imposing a more restrictive exclusion for the medically needy than for the categorically needy and that,
therefore, IRAs are not included for purposes of determining eligibility of a medically needy person.
Although, the New Jersey Medicaid regulations do not specifically exclude a community spouse's pension
plans and IRAs from the eligibility determination, the Appellate Division held that pension plans and IRAs
were required to be excluded from the determination because of the “no more restrictive methodology”
provision.
The Appellate Division denied the Division's motion for reconsideration. The Supreme Court
granted the Division's petition for certification. At oral argument, the Court learned that Sophie had died,
rendering moot the underlying legal issue. Ordinarily the Court declines to decide moot appeals; however,
this issue is of significant public importance and is capable of repetition. Therefore, the Court resolves this
matter notwithstanding its mootness.
HELD: An individual retirement account (IRA) in the name of a husband is an includable resource for
purposes of determining a wife's Medicaid eligibility when the wife enters the nursing home but the husband
remains in the community.
1. States that participate in the Medicaid program must comply with the Act. Participating states are
required to provide assistance to the “categorically needy,” and may elect to provide Medicaid assistance to
the “medically needy.” Federal law also authorizes, at the option of the states, the provision of benefits to
“any reasonable categories” of applicants who do not otherwise qualify as categorically or medically needy.
States providing assistance to the medically needy must prescribe eligibility standards that are reasonable and
comparable for all groups. (pp. 8-13)
2. The Division claims that the “no more restrictive” provision is superseded by the Medicare Catastrophic
Coverage Act of 1988 (MCCA). MCCA was enacted to protect married couples when one spouse enters a
nursing home by ensuring that the spouse living in the community has sufficient income and resources to live
with independence and dignity. To end the pauperization of the community spouse, Congress enacted
legislation that enables the community spouse to protect a sufficient, but not excessive, amount of income
and resources to meet his or her own needs while the institutionalized spouse was in a nursing home at
Medicaid expense. Sophie's request for Medicaid benefits was denied because the Board found that Sophie
had more than $2,000 in resources after the allocation of resources to the community spouse authorized by
regulation. (pp. 13-17)
3. MCCA provides that it supersedes any other provision that is inconsistent with it. MCCA, the provisions
MCCA incorporates, and the New Jersey regulations that incorporate the MCCA do not specifically exclude
pensions or IRAs from the eligibility determination. However, Sophie points to a federal regulation
addressing the eligibility determination for SSI benefits that excludes a spouse's pension funds and IRAs
from one's assets. Sophie contends that even though she was not applying for SSI benefits, the methodology
for determining her eligibility can be “no more restrictive” than the methodology applicable to an SSI
application and, therefore, Joseph's IRA should be excluded for the purposes of determining her Medicaid
eligibility. Sophie's reliance on this regulation is misplaced. The regulation does not apply generally in
determining SSI eligibility, but applies only to exclude IRAs owned by ineligible spouses of SSI-eligible
individuals living in the same household. That narrow application in that circumstance is not a benchmark
for determination of eligibility in the case of medically needy or optionally categorically needy applications.
Furthermore, the methodology used in that regulation is inapplicable because the “no more restrictive”
provision is superseded by the MCCA. (pp. 17-22)
4. Whether the Mistricks were living together at the time of their resource assessment is not important
because the “no more restrictive” provision is inconsistent with and is superseded by MCCA. Thus,
Joseph's IRA is an includable resource in determining Sophie's Medicaid eligibility. (pp. 22-23)
The judgment of the Appellate Division is REVERSED.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI and
COLEMAN join in JUSTICE STEIN'S opinion.
SUPREME COURT OF NEW JERSEY
A-
110 September Term 1997
SOPHIE MISTRICK,
Petitioner-Respondent,
v.
DIVISION OF MEDICAL ASSISTANCE AND
HEALTH SERVICES,
Respondent-Appellant,
and
PASSAIC COUNTY BOARD OF SOCIAL
SERVICES,
Respondent.
Argued March 3, 1998 -- Decided June 8, 1998
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
299 N.J. Super. 76 (1997).
Meredith G. Van Pelt, Deputy Attorney
General, argued the cause for appellant
(Peter Verniero, Attorney General of New
Jersey, attorney; Joseph L. Yannotti,
Assistant Attorney General, of counsel).
Joseph A. Bottitta argued the cause for
respondent (Bottitta & Bascelli, attorneys;
Mr. Bottitta and Angelo Dattolo, on the
brief).
The opinion of the Court was delivered by
STEIN, J.
The critical issue presented by this appeal is whether an
individual retirement account (IRA) in the name of a husband must
be included as a resource for purposes of determining his wife's
Medicaid eligibility when the wife enters a nursing home but the
husband remains in the community. With greater life expectancy
significantly increasing the percentage of our population that
eventually may require institutional care, we appreciate that
resolution of the issue posed may have a substantial financial
effect on many families. A decision that an asset is included as
a resource for determining Medicaid eligibility may have the
effect of precluding eligibility, or postponing eligibility until
the asset in question has been “spent down” to pay for medical
expenses. See N.J.S.A. 30:4D-3i(15)(c). We also acknowledge
that judicial authority in resolving such issues is tightly
circumscribed by the myriad of federal and state statutes and
regulations that control virtually every aspect of Medicaid
eligibility.
Respondent Sophie Mistrick and Joseph Mistrick were married on November 15, 1952. In October 1994, Sophie was admitted into Wayne View Convalescent Center. At the time of Sophie's institutionalization, the couple owned the following assets: their home in Wayne; an International Security Products GAFCAP 401(k) account in Joseph's name with a balance of $118,809.47; a Vanguard IRA in Joseph's name with a balance of $23,783.25; a savings account in Joseph's name with a balance of $10,251.35; a
savings IRA in Joseph's name with a balance of $9,253.62; a
credit union account in Joseph's name with a balance of
$23,294.90; life insurance in Joseph's name with a total cash
surrender value of $15,565.37; and a savings account in Sophie's
name with a balance of $34,075.98.
In April 1995, subsequent to Sophie's institutionalization,
Joseph retired from his employment at International Specialty
Products. During his employment, International Specialty
Products had not offered a company pension plan but had
established the GAFCAP 401(k) program that Joseph used as a
retirement account. As a condition of his retirement, Joseph
rolled over the GAFCAP 401(k) into his existing Vanguard IRA
account. At his retirement, Joseph received monthly income as
follows: $1,220 from Social Security; $178 from an unidentified
pension fund; and $1,060 from his IRA.
In August 1995, Joseph made an application on Sophie's
behalf to appellant Passaic County Board of Social Services
(Board) for institutional Medicaid benefits. Joseph supplied the
Board with the necessary documentation concerning assets owned by
the couple and assets owned by Sophie and Joseph individually.
Prior to applying for Medicaid benefits, the couple conducted a
private resource “spend-down” that substantially diminished their
net worth. Joseph retained the house, a community spouse
resource allowance, so called by the Medicaid regulations,
totaling approximately $24,000, and his Vanguard IRA. The Board
denied Sophie's Medicaid application,
concluding that Sophie was
ineligible for Medicaid benefits because
Joseph's IRA was an
includable resource for the purpose of determining Medicaid
eligibility and that therefore Sophie's available resources
exceeded the $2000 eligibility limit.
Sophie requested a hearing to contest the denial of Medicaid
benefits. Appellant Division of Medical Assistance & Health
(Division) referred the matter to the Office of Administrative
Law. An administrative law judge (ALJ) held a plenary hearing
and concluded that Joseph's 401(k), which was rolled over into an
IRA that was in "a current pay status," was not an available
resource and therefore should not have been included in the
determination of Medicaid eligibility. The ALJ recommended that
the couple's resources be redetermined to exclude the 401(k) that
was rolled over into an IRA account held in Joseph's name.
The Board filed exceptions to the ALJ's decision. Sophie
filed cross-exceptions. The Director of the Division filed a
final decision, in which she adopted the ALJ's findings of fact
but did not adopt the ALJ's conclusions of law. The Director
concluded that Joseph's IRA was an includable resource for the
purpose of determining Sophie's Medicaid eligibility.
Sophie appealed the Director's decision. The Appellate
Division reversed and remanded the matter for calculation of the
couple's resources without including Joseph's IRA. Mistrick v.
Division of Med. Assistance & Health Servs.,
299 N.J. Super. 76,
84 (App. Div. 1997).
The Appellate Division reviewed the Medicaid system,
describing the cooperative program between the federal government
and participating states that provides medical assistance at
public expense to needy persons. Id. at 79. The court noted
that state participation requires state Medicaid compliance with
Title XIX of the Social Security Act,
42 U.S.C.A.
§§1396-1396v,
which provides that participating states must make assistance
available to "categorically needy" persons, a term that includes
persons receiving categorical aid, such as Aid to Families with
Dependent Children (AFDC) and Supplemental Security Income (SSI).
Id. at 79-80. The federal statute also authorizes states to
provide assistance to other classifications of needy persons,
"including those persons whose income and resources are too low
to meet their medical expenses yet too high to qualify them for
cash assistance under SSI or AFDC." Id. at 80 (citing
42 U.S.C.A.
§1396a(a)(10)(C) and
42 U.S.C.A.
§1396d(a)). "This
group is known as the 'medically needy.'" Ibid. The court noted
that New Jersey has elected to participate in the federal
Medicaid program and has elected "to provide assistance to
medically needy individuals consistent with federal guidelines."
Ibid. (citing N.J.S.A. 30:4D-3i(8)).
The Appellate Division referred to
42 U.S.C.A.
§1396a(a)
(10)(C)(i)(III), which requires that states providing assistance
to the medically needy must prescribe a single standard for
determining income and resource eligibility for medically needy
individuals, and that the methodology used to determine
eligibility must be "no more restrictive" than the methodology
used under the SSI program. Id. at 80-81. The court considered
whether the methodology referred to in
42 U.S.C.A.
§1396a(a)
(10)(C)(i)(III) "includes the determination of which assets may
be included in calculating resource eligibility," stating that if
that determination is a matter of methodology, "then it is at
once evident that under the 'no more restrictive' proviso, assets
which may not be included by the State for determining resource
eligibility for SSI may also not be included by the State for
determining resource eligibility for medically-needy
participants." Id. at 81-82.
The court observed that for purposes of SSI, or
categorically-needy eligibility, 20 C.F.R. § 416.1202(a)
specifically excludes
from consideration in the eligibility
determination
pension plans and IRAs in the name of the spouse of
the person seeking medical assistance. Id. at 82. Thus, the
court determined that if Sophie had applied for SSI benefits,
Joseph's IRA would not be includable when determining her SSI
eligibility. Ibid. The court concluded that the SSI
"methodology" referred to by § 1396a(a)(10)(C)(i)(III)
encompasses the determination of includable and excludable
assets. Accordingly, the court held “that the State is precluded
by the Supremacy Clause of the United States Constitution from
imposing a more restrictive exclusion for the medically needy
than for the categorically needy,” ibid., and that IRAs are not
included for purposes of determining eligibility of a medically
needy person because of the "no more restrictive” methodology
provision. Ibid.
In reaching its conclusion, the court relied on the United
States Supreme Court's interpretation of the "same methodology”
in Atkins v. Rivera,
477 U.S. 154,
106 S. Ct. 2456,
91 L. Ed.2d 131 (1986). Id. at 82-83. The Atkins Court held that the "same
methodology" requirement mandated that states “treat components
of income . . . similarly for both medically and categorically
needy individuals.” Atkins, supra, 477 U.S. at 163, 106 S. Ct.
at 2461, 91 L. Ed.
2d at 141. Finding components of income and
components of resources congruent, the Appellate Division held
that assets excludable when calculating resources for the
categorically needy were necessarily excludable when calculating
resources for the medically needy. Mistrick, supra, 299 N.J.
Super. at 83. The Appellate Division noted the Atkins Court's
explanation of the impetus behind § 1396a(a)(10)(C)(i)(III): to
allow the states to set different income and resource levels for
medically needy applicants, but to prevent states from using
eligibility standards unrelated to those used to determine the
eligibility of the categorically needy. Ibid. (citing Atkins,
supra, 477 U.S. at 165, 106 S. Ct. at 2462, 91 L. Ed.
2d at 142).
Although the New Jersey Medicaid regulations do not
specifically exclude a community spouse's pension plans and IRAs
from the eligibility determination, the court nevertheless held
that pension plans and IRAs were required to be excluded from the
determination because of the "no more restrictive methodology"
provision. Ibid. The court concluded that "[t]he whole point of
[the "no more restrictive" provision] is to require the same
treatment for the medically needy as for the categorically needy
in respect of the methods by which their respective eligibilities
are determined. Excludability of assets is part of that method.
There may be no disparity." Id. at 84.
The Appellate Division denied the Division's motion for
reconsideration. We granted the Division's petition for
certification.
151 N.J. 469 (1997). After oral argument we
learned that Sophie Mistrick had died, rendering moot the
underlying legal issue. Although ordinarily we decline to decide
moot appeals, we occasionally will rule on such matters where
they are of substantial importance and are capable of repetition,
yet evade review. Zirger v. General Accident Ins. Co.,
144 N.J. 327, 330 (1996); Division of Youth & Family Servs. v. J.B.,
120 N.J. 112, 118-19 (1990); In re J.I.S. Indus. Serv. Co. Landfill,
110 N.J. 101, 104-05 (1988). The issue before us is of
significant public importance and is capable of repetition
whenever a county social services board reviews an application
for Medicaid benefits from an institutionalized person whose non-institutionalized spouse has an IRA. Accordingly, we will
resolve the issue notwithstanding its mootness.
Each participating state must adopt a plan that "includes 'reasonable standards . . . for determining eligibility for and the extent of medical assistance . . . [that is] consistent with the objectives' of the Medicaid program." L.M., supra, 140 N.J. at 484 (quoting 42 U.S.C.A. §1396a(a)(17)(A)). Each applicant must satisfy the criteria for eligibility established by the state in which the applicant lives. Id. at 485 (citing Schweiker v. Grey Panthers, 453 U.S. 34, 36-37, 101 S. Ct. 2633, 2636, 69 L. Ed.2d 460, 465 (1981)). New Jersey has elected to participate in the Medicaid program by enacting the New Jersey Medical Assistance and Health Services Act. N.J.S.A. 30:4D-1 to -19.1. The Department of Human Services has the responsibility for administering the program. N.J.S.A. 30:4D-3c.
Participating states are required, under federal law, to
provide assistance to the "categorically needy." L.M., supra,
140 N.J. at 485 (citing
42 U.S.C.A.
§1396a(a)(10)(A)(i)). That
group includes persons eligible to receive benefits under AFDC or
SSI. See
42 U.S.C.A.
§1396a(a)(10)(A)(i). Congress considered
those persons "especially deserving of public assistance because
of family circumstances, age, or disability." Schweiker, supra,
453 U.S. at 37, 101 S. Ct. at 2637, 69 L. Ed.
2d at 466-67
(footnote omitted). In addition, states may also elect to
provide Medicaid assistance to the "medically needy," who have
income and resources that are insufficient to pay their medical
expenses, but are too high to qualify them for AFDC or SSI, and
who otherwise meet the nonfinancial eligibility requirements for
those programs. Atkins, supra, 477 U.S. at 157-58, 106 S. Ct. at
2459, 91 L. Ed.
2d at 137; L.M., supra, 140 N.J. at 487-88. New
Jersey has chosen to provide assistance to the medically needy
under its “Medically Needy” program, N.J.A.C. 10:70-1.1 to -7.3,
by enacting N.J.S.A. 30:4D-3i(8).
Additionally, federal law authorizes, at the option of the
states, the provision of benefits to "any reasonable categories"
of applicants who do not otherwise qualify as categorically or
medically needy.
42 U.S.C.A.
§1396a(a)(10)(A)(ii); see
Skandalis v. Rowe,
14 F.3d 173, 175 (2d Cir. 1994)(“The line
between mandatory and optional coverage is primarily drawn in
§ 1396a(a): mandatory coverage is specified in § 1396a(a)(10)(A)
(i), and the state options are set forth in subsection (ii).”).
The list of "reasonable categories,"
42 U.S.C.A.
§1396a(a)(10)
(A)(ii), includes persons who are in medical institutions for at
least thirty consecutive days, who meet resource requirements set
by the state, and whose income does not exceed the limitation
provided in
42 U.S.C.A.
§1396b(f)(4)(C), which sets the ceiling
at 300 percent of the benefit rate established by SSI.
42 U.S.C.A.
§1396a(a)(10)(A)(ii)(V) effectively imposes an “income
cap on these individuals . . . .” New Mexico Dep't of Human
Servs. v. Department of Health and Human Servs. Health Care Fin.
Admin.,
4 F.3d 882, 883 (10th Cir. 1993). New Jersey provides
benefits to those applicants considered "optionally categorically
needy" under its “Medicaid Only” program. New Jersey will
provide Medicaid benefits under “Medicaid Only” to a married
individual seeking nursing facility services if the couple
expends "those resources which are not protected for the needs of
the community spouse in accordance with [
42 U.S.C.A.
§1396r-5(c)] on the costs of long-term care, burial arrangements, and
any other expense deemed appropriate and authorized by the
commissioner." N.J.S.A. 30:4D-3i(15)(c).
States providing assistance to the medically needy must
prescribe eligibility standards that are "reasonable" and
"comparable for all groups."
42 U.S.C.A.
§1396a(a)(17); Atkins,
supra, 477 U.S. at 158, 106 S. Ct. at 2459, 91 L. Ed.
2d at 138.
Every participating state plan providing benefits for the
medically needy must include
the single standard to be employed in
determining income and resource eligibility
for all such [covered] groups, and the
methodology to be employed in determining
such eligibility, which shall be no more
restrictive than the methodology which would
be employed under the [SSI] program in the
case of groups consisting of aged, blind, or
disabled individuals [i.e., “categorically
needy”] in a State in which such program is
in effect, and which shall be no more
restrictive than the methodology which would
be employed under the appropriate State plan
. . . to which such group is most closely
categorically related . . . .
§ 1396a(r)(2)(B).
In Atkins, supra, the United States Supreme Court considered the meaning of the "same methodology" requirement, the forerunner of the “no more restrictive” methodology requirement. See 477 U.S. at 156, 106 S. Ct. at 2458, 91 L. Ed. 2d at 136. Medicaid applicants claimed that the "same methodology" provision required that rather than using a six-month spenddown period for determining medical expenses, the State of Massachusetts had to use a one-month spenddown period, just as the federal regulations
provided. Id. at 159-60, 106 S. Ct. at 2459-60, 91 L. Ed.
2d at
138-39.
Finding the "same methodology" provision inapplicable in
determining the spenddown period, the Court concluded that the
"'same methodology' requirement simply instructs States to treat
components of income--e.g., interest or court-ordered support
payments--similarly for both medically and categorically needy
persons." Id. at 163, 106 S. Ct. at 2461, 91 L. Ed.
2d at 141.
The Court examined the legislative history of the requirement and
noted that the impetus for the requirement was to allow states to
use different eligibility levels, but to prohibit states from
using income and resource standards that deviated from those used
for AFDC and SSI. Id. at 163-65, 106 S. Ct. at 2461-62, 91 L.
Ed.
2d at 141-42. The Court concluded that the requirement
operated to invalidate "regulations permitting the income and
resource standards in State Medicaid plans to deviate from those
used in the AFDC and SSI programs in 'such matters as deemed
income, interest, court-ordered support payments, and infrequent
and irregular income.'" Id. at 166, 106 S. Ct. at 2463, 91 L.
Ed.
2d at 143. Because the Medicaid Act was silent concerning
any requirement regarding spenddown periods, the Court concluded
that states were free to determine their own spenddown periods.
Id. at 167, 106 S. Ct. at 2463, 91 L. Ed.
2d at 143.
A
Congress enacted MCCA to protect married couples when one spouse (the “institutionalized spouse”) enters a nursing home by ensuring that the spouse living in the community (the “community spouse”) has “sufficient income and resources to live with independence and dignity.” Thomas v. Commissioner of Div. of Med. Assistance, 682 N.E.2d 874, 875 (Mass. 1997). Prior to the passage of MCCA, when a married person became institutionalized, all of the couple's jointly-held assets were deemed available to the institutionalized spouse and were required to be spent down to the SSI eligibility limits before the institutionalized spouse would be eligible for Medicaid. H.R. Rep. No. 100-105(II), at 65-67 (1988), reprinted in 1 988 U.S.C.C.A.N. 857, 888-90. That policy had the effect of forcing the community spouse to spend down virtually all of the marital assets before the institutionalized spouse could be eligible for Medicaid and
resulted in community spouses having to sue their
institutionalized spouses for support or become prematurely
institutionalized themselves. See 1988 U.S.C.C.A.N. at 892;
Torch, Spousal Impoverishment or Enrichment? An Assessment of
Asset and Income Transfers by Medicaid Applicants,
4 Elder L. J. 459, 460-61 (1996).
To prevent impoverishment of community spouses in that
manner, Congress enacted the "spousal impoverishment" provisions
of MCCA that provide for “special treatment for institutionalized
spouses.”See footnote 1 See
42 U.S.C.A.
§1396r-5. Those provisions were
intended to end the pauperization of the community spouse by
allowing that spouse to protect a sufficient, but not excessive,
amount of income and resources to meet his or her own needs while
the institutionalized spouse was in a nursing home at Medicaid
expense. 1988 U.S.C.C.A.N. at 888. Congress also recognized
that because the allocation of resources depended wholly on
whether a resource was in the name of one spouse or the other,
couples could shelter their resources in the name of the
community spouse while the institutionalized spouse would receive
Medicaid coverage. See Cleary v. Waldman,
959 F. Supp. 222, 229
(D.N.J. 1997)(stating that although Medicaid provided care for
indigent, public nevertheless needed protection from diversion of
public funds). MCCA closed this loophole by considering a
couple's resources in their entirety, regardless of the name in
which the resources were held. See 121 Cong. Rec. H6568-04
(1987)(daily ed. July 22, 1987)(statement of Rep. Tauke)(stating
that MCCA would "change the unfair policy which requires non-institutionalized spouses to be impoverished before the
institutionalized spouse can receive benefits, and at the same
time . . . ensure[s] that no one escapes contributing a fair
share to nursing home care costs”).
Under MCCA, when one member of a married couple seeks
Medicaid benefits to cover the costs of her nursing home care
while her spouse remains living in the community, the
institutionalized spouse's eligibility is based on a “snapshot”
of the couple's total resources as of the beginning of the first
continuous period of institutionalization. See 42 U.S.C.A.
§ 1396r-5(c)(1)(A). Following MCCA, N.J.A.C. 10:71-4.8(a)(1)
provides that a couple's combined countable resources are
determined “as of the first moment of the first day of the month
of the current period of institutionalization . . . .” To avoid
having to spend down assets to qualify the institutionalized
spouse for Medicaid and thus impoverish himself in the process,
the community spouse is allowed to keep a “community spouse
resource allowance.” See
42 U.S.C.A.
§1396r-5(f)(2). A New
Jersey regulation provides that the allowance shall not exceed
$76,740. N.J.A.C. 10:71-4.8(a)(1). Only resources of the couple
in excess of the $76,740 community spouse resource allowance are
taken into account in determining the institutionalized spouse's
Medicaid eligibility.
42 U.S.C.A.
§1396r-5(c)(2)(B); N.J.A.C.
10:71-4.8. The remaining resources in excess of the community
resource allowance are considered available to the
institutionalized spouse, who will be eligible for Medicaid only
if those remaining resources are less than or equal to $2,000.
N.J.A.C. 10:71-4.8(a)(2). Respondent's application for Medicaid
benefits was denied by the Passaic County Board of Social
Services because the Board found that she, the institutionalized
spouse, had more than $2,000 in resources after the allocation of
resources to the community spouse authorized by regulation.
MCCA provides as follows:
(a) Special treatment for institutionalized spouses
(1) Supersedes other provisions
In determining the eligibility for
medical assistance of an institutionalized
spouse . . . the provisions of this section
supersede any other provision of [Subchapter
XIX--Grants to States for Medical Assistance
Programs,
42 U.S.C.A.
§§1396-1396v] which
is inconsistent with them.
. . . .
(3) Does not affect certain determinations
Except as this section specifically
provides, this section does not apply to--
(A) the determination of what constitutes
income or resources, or
(B) the methodology and standards for
determining and evaluating income and
resources.
42 U.S.C.A. §1382b(a) and (d) specifically exclude, among other things, the home, household goods and an automobile not in excess of an amount determined to be reasonable by the Commissioner, funds set aside for burial expenses, and "other property which is so essential to the means of self-support of such individual (and such spouse) as to warrant its exclusion, as determined in accordance with and subject to limitations prescribed by the Commissioner of Social Security . . . ." (See related discussion infra at ___ (slip op. at 19 n.2)). The statute does not specifically exclude pensions or IRAs. The applicable New Jersey regulations similarly do not explicitly exclude a community spouse's pension or IRA. See N.J.A.C. 10:71-4.4(b)(excluding, for purposes of general Medicaid eligibility, the home, one automobile if “necessary” or if valued at $4,500 or less, personal effects valued at $2,000 or less, cash surrender value of life insurance policy not in excess of $1,500, and value of resources not accessible to individual through no fault of his or her own); N.J.A.C. 10:71-4.8(a)(8)(excluding, for purposes of Medicaid eligibility for married individual requiring long-term care, all resources subject to exclusion pursuant to N.J.A.C.
10:71-4.4, except automobile and personal effects shall be
excluded without regard to value).
Although MCCA, the provisions MCCA incorporates, and the New
Jersey regulations that incorporate MCCA do not specifically
exclude pensions or IRAs from the eligibility determination,
respondent points to a federal regulation
concerning the
eligibility determination for SSI benefits that excludes a
spouse's pension funds and IRAs from one's assets. 20 C.F.R.
§ 416.1202 provides:
In the case of an individual who is living
with a person not eligible [for SSI benefits]
and who is considered to be the husband or
wife of such individual . . . , such
individual's resources shall be deemed to
include any resources, not otherwise excluded
under this subpart, of such spouse whether or
not such resources are available to such
individual. In addition to the exclusions
listed in s 416.1210 [including the home,
household goods, an automobile, life
insurance, and funds for burial expenses,
provided that value does not exceed
amounts provided by regulation], pension
funds which the ineligible spouse may have
are also excluded. "Pension funds" are
defined as funds held in individual
retirement accounts (IRA), as described by
the Internal Revenue Code, or in work-related
pension plans (including such plans for
self-employed individuals, sometimes referred
to as Keogh plans).See footnote 2
Respondent contends that even though she was not applying
for SSI benefits, the "no more restrictive" provision,
42 U.S.C.A.
§§1396a(a)(10)(C)(i)(III), 1396a(r)(2)(A), controls and
that because the foregoing regulation excludes IRAs from SSI
eligibility determinations, the methodology for determining her
eligibility can be “no more restrictive” than the methodology
applicable to an SSI applicant. Therefore, she argues, Joseph's
IRA should be excluded for the purposes of determining her
Medicaid eligibility. The Division, however, contends that MCCA
renders the "no more restrictive" provision inapplicable.
MCCA provides that it supersedes any other provision that is
inconsistent with it.
42 U.S.C.A.
§1396r-5(a)(1). MCCA further
indicates that
the term "resources" does not include those items
excluded from the definition of "resources" pursuant to
42 U.S.C.A.
§1382b(a) and (d).
42 U.S.C.A.
§1396r-5(c)(5). Those
subsections do not exclude IRAs or pension plans from the
determination of "resources." However, the SSI regulation, 20
C.F.R. § 416.1202, excludes for purposes of determining SSI
eligibility IRAs owned by an SSI-ineligible spouse living in the
same household. On two grounds, however, we conclude that
reliance on that SSI regulation is misplaced.
First, the regulation does not apply generally in
determining SSI eligibility, but applies only to exclude IRAs
owned by ineligible spouses of SSI-eligible individuals living in
the same household. Its narrow application, therefore, does not
render the exclusion of IRAs in that specific circumstance a
benchmark for determination of eligibility in the case of
medically needy or optionally categorically needy applications.
Second, even assuming the regulation excluding IRAs for
purposes of SSI eligibility had a broader scope, we find the
methodology used in that regulation inapplicable here because we
conclude that the “no more restrictive” provision is superseded
by MCCA. MCCA explicitly provides that it supersedes any
provision that is inconsistent with it.
For purposes of
determining medically needy or optionally categorically needy
eligibility, application
of a methodology “no more restrictive”
than the SSI methodology
set forth in 20 C.F.R. § 416.1202, which
excludes IRAs, would clearly be inconsistent with MCCA, which
specifies by reference to
42 U.S.C.A. 1382b(a) and (d) what items
are excluded from the determination of resources, without
excluding IRAs. In that context, the conclusion is inescapable
that MCCA supersedes the “no more restrictive” provision. See
42 U.S.C.A.
§§1396a(a)(10)(C)(i)(III), 1396a(r)(2)(A). Thus, MCCA
requires the inclusion of the community spouse's IRA in the
determination of the institutionalized spouse's resources.
The legislative history of MCCA supports our conclusion.
The Senate amendment to the House bill proposed an additional
provision concerning the treatment of resources that would have
excluded “resources that are necessary to produce income that is
available to the community spouse or the family allowance.” H.R.
Conf. Rep. No. 100-661, at 263 (1988), reprinted in 1
988 U.S.C.C.A.N. 923, 1041. However, the conference agreement “[did]
not exclude from countable resources those assets necessary to
produce income available to the community spouse or the family
allowance.” 1988 U.S.C.C.A.N. at 1043. Instead, the agreement
provided that “either the institutionalized or the community
spouse may request a fair hearing as to whether the community
spouse resource allowance is adequate to generate sufficient
income to raise the community spouse's income to the minimum
monthly maintenance needs allowance.” Ibid. We are confident
that had Congress intended MCCA to exclude resources necessary to
produce income, such as IRAs, the proposed exclusion would have
been adopted.
We repeat that the SSI regulation relied on by respondent,
20 C.F.R. § 416.1202, applies only to a spouse eligible for SSI
benefits who is living with his or her ineligible spouse.
Respondent contends that she and her husband were living together
at the time of their resource assessment; the Division contends
that they were not. MCCA provides that the “snapshot” assessment
of a couple's resources and of the community spouse's share is
computed “as of the beginning of the first continuous period of
institutionalization . . . of the institutionalized spouse.”
42 U.S.C.A.
§1396r-5(c)(1). An institutionalized spouse is “an
individual who . . . is in a medical institution or nursing
facility . . . and is married to a spouse who is not in a medical
institution or nursing facility.”
42 U.S.C.A.
§1396r-5(h)(1).
Therefore, by definition an institutionalized spouse cannot be
living with a community spouse. However, we note that the
dispute between the parties concerning whether the Mistricks were
living together is academic.
The question is not whether the SSI
regulation concerning spouses who live together actually applied,
but whether MCCA superseded the “no more restrictive methodology”
provision. Whether the Mistricks were living together at the
time of their resource assessment is of no import because we
conclude that the “no more restrictive” provision is inconsistent
with and therefore is superseded by MCCA.
T
he parties have not addressed whether Joseph's IRA was
available within the meaning of the regulation.
We note that an
IRA holder generally has the right, authority, and power to gain
access to the funds in such an account. See Ernst & Young's
Retirement Planning Guide 84 (1997); The Vanguard Guide to
Planning for Retirement 184 (3d ed. 1998). A Medicaid applicant
seeking to argue that an IRA is unavailable would have the burden
of proving its unavailability.
We conclude that Joseph Mistrick's IRA was an includable
resource for the purposes of determining Sophie Mistrick's
Medicaid eligibility. The judgment of the Appellate Division is
reversed.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, and COLEMAN join in JUSTICE STEIN's opinion.
NO. A-110 SEPTEMBER TERM 1997
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
SOPHIE MISTRICK,
Petitioner-Respondent,
v.
DIVISION OF MEDICAL ASSISTANCE
AND HEALTH SERVICES,
Respondent-Appellant,
and
PASSAIC COUNTY BOARD OF SOCIAL
SERVICES,
Respondent.
DECIDED June 8, 1998
Chief Justice Poritz PRESIDING
OPINION BY Justice Stein
CONCURRING OPINION BY
DISSENTING OPINION BY
Footnote: 1
Congress later repealed MCCA through the Medicare
Catastrophic Coverage Repeal Act of 1989 (Pub. L. No. 101-234,
103 Stat. 1979), but the spousal impoverishment prevention
provisions were retained.
Footnote: 2
That regulation was adopted not in accordance with the
Commissioner's discretionary authority pursuant to 42 U.S.C.A.
§ 1382b(a)(3) to exclude other property that is “so essential to
the means of self-support . . . as to warrant its exclusion,” but
rather pursuant to
42 U.S.C.A.
§1382c(f)(1), which provides:
For purposes of determining [SSI]
eligibility for and the amount of benefits
for any individual who is married and whose
spouse is living with him in the same
household but is not an eligible spouse,
such individual's income and resources shall
be deemed to include any income and resources
of such spouse, whether or not available to
such individual, except to the extent
determined by the Commissioner of Social
Security to be inequitable under the
circumstances.
Thus, the effect of the regulation is that when a married person eligible for SSI lives with his or her spouse who is ineligible for SSI, pensions and IRAs held by the ineligible spouse are to be excluded from the SSI eligibility determination.