Amici Curiae of NAELA and Special Needs Alliance

In February 2018, NAELA and the Special Needs Alliance (SNA) filed an amicus brief in Cox v. Iowa Department of Human Services (see link below) arguing that funding a d-4-C trust by an individual over age 64 was governed by the Medicaid trust statute, 42 U.S.C. § 1396p(d), and not subject to penalty under the anti-transfer provision, § 1396p(c). The plaintiff-appellant who NAELA-SNA were supporting argued that the couple who funded the pooled trust accounts, both aged 65, got fair market value in doing so.

The court rejected both arguments. As to the exemption argument, it relied on CMS opinions and prior federal and state court decisions that relied almost exclusively on the argument that the exclusion from the anti-transfer provision for transfers to trusts for disabled people under age 65 (42 U.S.C. § 1396p(c)(2)(B)(iv)) must mean that all transfers to people over age 64 are subject to penalty. As to fair market value, the court held that an asset whose use is limited, even for the protection of the owner, is less valuable than one they could use for any purpose they wanted.

One judge dissented as to both issues. The dissenting judge largely agreed with the position urged by NAELA and SNA that the trust provision (d) “addresses the question of when and under what circumstances transactions involving a trust …are considered transfers subject to unfavorable treatment… providing for either an availability penalty or a transfer penalty, but not both.” He agreed with the NAELA-SNA analysis that the other approach, applying the transfer provision to trust funding independent of the trust provision cross references, resulted in redundant, overlapping provisions. He also reviewed the transfer exception that the majority relied on and explained its necessary role in permitting funding transfers to others. He had a particularly acute critique of the prior decisions, noting their errors or failure to address fundamental aspects of the issue.

A similar amicus brief was filed in Hutson v. Mosier, and the NAELA Foundation and SNA are supporting the plaintiff presenting the same question in Maine Pooled Disability Trust v. Hamilton, 1st Cir., reviewing Richardson v. Hamilton. See also Richardson v. Maine Department of Health and Human Services on the NAELA Foundation website.
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