Addressing the topic of spousal protections: case law update on annuities. In the case of Hughes, et al. v. McCarthy, 734 F.3d 473 (6th Cir. 2013), cert. denied 134 S.Ct. 1765, (March 31, 2014), the US Sixth Circuit Court decided that in spousal circumstances, the well spouse can clearly utilize a commercial single premium immediate pay annuity to create income for the well spouse. This decision was issued based upon federal statutory law. The Ohio Department of Medicaid attempted to appeal this case to the US Supreme Court; however, the US Supreme Court denied certiorari, thus upholding the lower court decision.
The Ohio Department of Medicaid has instructed their hearing officers to disregard this controlling precedent, trying to justify the position that as this was not a class action case, it is not controlling. There is no legal support for such a position and if that were true, why did the Ohio Department of Medicaid try to appeal the case to the US Supreme Court?
The case is based upon federal statutory law and a federally funded program, decided by a federal court. There are five other US Circuit Court decisions, all which affirm or confirm the Hughes decision. Aggressive use of these annuities whereby the annuity term is very short or the amount placed in the annuity is very large is discouraged. This type of plan is necessary so that the well spouse or the surviving spouse is not impoverished. The intent of Congress is clear; however, the Kasich administration seems to be of the mind that they are not controlled by court decisions, whether they be state court decisions or federal court decisions. Interestingly, the two state appellate courts also made the same finding as the Federal Sixth Circuit Court. Experienced counsel and careful planning are imperative for spousal cases. Keeping you informed are the trusted attorneys from Browning & Meyer Co., LPA. Please contact our law office with any questions.