Ahern v. Thomas, (SC 15845)

• Citation: 248 Conn. 708,733 A.2d 756
• Decision Date: 18 May 1999
• Docket Number: (SC 15845)
• Court: Connecticut Supreme Court
• Parties: MILDRED F. AHERN v. JOYCE THOMAS, COMMISSIONER OF SOCIAL SERVICES

248 Conn. 708

733 A.2d 756

MILDRED F. AHERN v. JOYCE THOMAS, COMMISSIONER OF SOCIAL SERVICES

(SC 15845)

Supreme Court of Connecticut.

Argued October 27, 1998.

Officially released May 18, 1999.

Callahan, C. J., and Borden, Berdon, Norcott, Katz, Palmer and McDonald, Js. Patrick B. Kwanashie, assistant attorney general, with whom were Maite Barainca, assistant attorney general, and, on the brief, Richard Blumenthal, attorney general, and Richard J. Lynch, assistant attorney general, for the appellant (defendant).

George B. Bickford, with whom, on the brief, was Neil W. Kraner, for the appellee (plaintiff).

Opinion

CALLAHAN, C. J.

Title XIX of the Social Security Act; 42 U.S.C. § 1396 et seq.; provides that a determination of eligibility for medicaid benefits may be based on "only such income and resources as are ... available to the applicant ...."¹ In 1990, the plaintiff, Mildred F. Ahern, established and funded a trust. The sole issue in this administrative appeal is whether the principal of that trust is a resource "available" to the plaintiff for purposes of determining her eligibility to receive benefits under the medicaid program. We conclude that it is not available to her.

The following facts and procedural history are undisputed. The plaintiff, a ninety-two year old woman, has resided at St. Mary Home (home), a nursing facility located in West Hartford, since January, 1990. On October 6, 1990, she established and funded a trust. The trust instrument directs, inter alia, that the trustees² "shall pay or apply the net income of the trust estate to or for the benefit of the [plaintiff] during [her] lifetime."

From the time of her admission to the home until November, 1994, to pay for her care, the plaintiff utilized her income as well as assets that had not been transferred to the trust. Those assets, however, were depleted by November, 1994. Thereafter, the income the plaintiff has received from the trust has been applied toward the cost of her care at the home. The plaintiffs other income, which includes social security and pension benefits, also has been used to pay for that care. The cost of her care, however, exceeds the plaintiffs total income. On November 16, 1994, the plaintiff applied to the department of social services (department) for medicaid benefits³ seeking financial assistance for the cost of her care in excess of her total income.⁴

In July, 1995, the department determined that under the terms of the trust instrument, not only the net trust income but also the trust principal, which at that time was $637,937, were "available" to the plaintiff for purposes of determining her medicaid eligibility. Consequently, the department concluded that the plaintiffs "available" resources exceeded the $1600 resource limit for medicaid eligibility set forth in Connecticut's state medicaid plan; see General Statutes §§ 17b-264 and 17b-80 (c);⁵ see also Department of Social Services, Uniform Policy Manual (1993) § 4005.10 (Uniform Policy Manual); and, on that basis, denied her application.

The plaintiff then exercised her right to an administrative appeal before a fair hearing officer. See General Statutes § 17b-66.⁶ The hearing officer also concluded that the plaintiffs "available" resources exceeded the $1600 eligibility limit and denied her medicaid application. Thereafter, the plaintiff appealed from the hearing officer's decision to the Superior Court pursuant to General Statutes §§ 17b-65 and 4-183.⁷ On appeal to that court, the plaintiff maintained that the hearing officer improperly had included the trust principal in the calculation of her "available" resources. The trial court agreed and reversed the fair hearing officer's decision.

The defendant, Joyce Thomas, the commissioner of the department, appealed from the trial court's judgment to the Appellate Court. We transferred the appeal to this court pursuant to Practice Book § 65-1 and General Statutes § 51-199 (c).

On appeal, the defendant maintains that the trial court improperly determined that the plaintiff's "available" resources did not exceed the $1600 medicaid eligibility limitation. See General Statutes §§ 17b-264 and 17b-80 (c); Uniform Policy Manual, supra, § 4005.10. Specifically, the defendant claims that, pursuant to the medicaid qualifying trust provisions set forth at 42 U.S.C. § 1396a (k) (1988),⁸ the entire trust principal is an asset "available" to the plaintiff, and that the trust principal, therefore, properly should be included in the calculation of the plaintiff's eligibility for medicaid benefits. See 42 U.S.C. § 1396a (a) (17) (B).⁹ We disagree.

I

Our analysis begins with an overview of the medicaid program. The program, which was established in 1965 as Title XIX of the Social Security Act and is codified at 42 U.S.C. § 1396 et seq. (medicaid act), is a joint federal-state venture providing financial assistance to persons whose income and resources are inadequate to meet the costs of, among other things, medically necessary nursing facility care. Atkins v. Rivera, 477 U.S. 154, 156, 106 S. Ct. 2456, 91 L. Ed. 2d 131 (1986); Harris v. McRae, 448 U.S. 297, 301, 100 S. Ct. 2671, 65 L. Ed. 2d 784 (1980); State v. Tuchman, 242 Conn. 345, 347-48, 699 A.2d 952 (1997); Burinskas v. Dept. of Social Services, 240 Conn. 141, 148, 691 A.2d 586 (1997). The federal government shares the costs of medicaid with those states that elect to participate in the program, and, in return, the states are required to comply with requirements imposed by the medicaid act and by the secretary of the Department of Health and Human Services. Atkins v. Rivera, supra, 156-57. Specifically, participating states are required to "`develop a plan, approved by the secretary of health and human services, containing reasonable standards ... for determining eligibility for and the extent of medical assistance'" to be provided. Burinskas v. Dept. of Social Services, supra, 148; Ross v. Giardi, 237 Conn. 550, 555, 680 A.2d 113 (1996); see also 42 U.S.C. § 1396a (a) (17).

Connecticut has elected to participate in the medicaid program and has assigned to the department the task of administering the program. General Statutes § 17b-2;¹⁰ see Burinskas v. Dept. of Social Services, supra, 240 Conn. 148; Ross v. Giardi, supra, 237 Conn. 555-56. Pursuant to General Statutes §§ 17b-262 and 17b-10,¹¹ the department has developed Connecticut's state medicaid plan and has promulgated regulations that govern its administration. See Uniform Policy Manual, supra.

The medicaid act requires that a state's medicaid plan make "medical assistance" available to qualified individuals. 42 U.S.C. § 1396a (a) (10). "The term `medical assistance' means payment of part or all of the cost of ... care and services ... [including] nursing facility services...." 42 U.S.C. § 1396d (a); see Catanzano v. Wing, 103 F.3d 223, 229 (2d Cir. 1996). Participating states are required to provide coverage to certain groups and are given the option to extend coverage to various other groups. The line between mandatory and optional coverage primarily is drawn in 42 U.S.C. § 1396a (a) (10) (A): mandatory coverage is specified in 42 U.S.C. § 1396a (a) (10) (A) (i); and optional coverage is set forth in subsection (a) (10) (A) (ii). In medicaid parlance, individuals who qualify for medicaid benefits pursuant to those subsections are referred to as the "categorically needy" because, in general, they are eligible for financial assistance under Titles IV-A (Aid to Families with Dependent Children)¹² or XVI (Supplemental Security Income for the Aged, Blind, and Disabled)¹³ of the Social Security Act.

Under the medicaid act, states have an additional option of providing medical assistance to the "medically needy"—persons who, like the plaintiff, lack the ability to pay for their medical expenses but do not qualify as "categorically needy" solely because their income exceeds the income eligibility requirements of the applicable categorical assistance program.¹⁴ Atkins v. Rivera, supra, 477 U.S. 157-58; Schweiker v. Gray Panthers, 453 U.S. 34, 37, 101 S. Ct. 2633, 69 L. Ed. 2d 460 (1981); Forsyth v. Rowe, 226 Conn. 818, 824, 629 A.2d 379 (1993); Matarazzo v. Rowe, 225 Conn. 314, 319, 623 A.2d 470 (1993). The "medically needy" become eligible for medicaid, if the state elects to cover them, by incurring medical expenses in an amount sufficient to reduce their incomes below the income eligibility level set by the state in its medicaid plan. See 42 U.S.C. § 1396a (a) (17) (in determining eligibility, state must take "costs... incurred for medical care" into account); see also 42 C.F.R. § 435.301. "Only when they `spend down' the amount by which their income exceeds that level, are [medically needy persons] in roughly the same position as [categorically needy] persons ... [because then] any further expenditures for medical expenses ... would have to come from funds required for basic necessities." Atkins v. Rivera, supra, 158. Connecticut has chosen to cover the medically needy. Forsyth v. Rowe, supra, 824.

The medicaid act, furthermore, requires participating states to set reasonable standards for assessing an individual's income and resources in determining eligibility for, and the extent of, medical assistance under the program. 42 U.S.C. § 1396a (a) (17); see also Forsyth v. Rowe, supra, 226 Conn. 824. The resources standard set forth in Connecticut's state medicaid plan for categorically needy and medically needy individuals is $1600. General Statutes §§ 17b-264 and 17b-80 (c); Uniform Policy Manual, supra, § 4005.10; see also Forsyth v. Rowe, supra, 824. Consequently, a person who has "available" resources; see 42 U.S.C. § 1396a (a) (17) (B); in excess of $1600 is not eligible to receive benefits under the Connecticut medicaid program even though the person's medical expenses cause his or her income to fall below the income eligibility standard.

Prior to 1986, however, the "availability...