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Reversing a lower court, an Indiana appeals holds that annuity payments are not available to a Medicaid applicant when determining his eligibility because he named his wife as the payee on the annuity contracts. Hotmer v. Indiana Family and Social Services Administration (Ind. Ct. App., No. 9A-PL-2694, June 30, 2020).

Randy Hotmer entered a nursing home and purchased two annuities. Mr. Hotmer named his wife as the payee and beneficiary on the annuity applications, which are part of the annuity contracts. While the contracts list Mr. Hotmer as the owner of the annuities and state that annuity payments are made to the owner, they also incorporate the applications and are irrevocable. When Mr. Hotmer applied for Medicaid, the state determined that the annuity payments belonged to Mr. Hotmer as the owner of the annuity and denied his application because his income was above the eligibility limit.

Mr. Hotmer appealed, and arguing that the annuity payments were made solely in the name of his wife, so they were not available to him. An administrative law judge agreed, but the state and the trial court disagreed, holding that Mr. Hotmer was not eligible for Medicaid.

The Indiana Court of Appeals reverses, holding that the annuity payments were not available to Mr. Hotmer. According to the court, the “annuity contracts, which include the annuity applications on which [Mr.] Hotmer named his wife as payee, are irrevocable”; therefore Mr. Hotmer “could not change the payee and make the payments available to him without breaching the contracts.”

For the full text of this decision, go to: https://www.in.gov/judiciary/opinions/pdf/06302001tac.pdf