To be eligible for Medicaid, an applicant who is single and over the age of 65 cannot have more than $2,000.00 in countable assets.  The Williford decision addressed the issue of whether Medicare Set-Aside funds stemming from a workers’ compensation settlement constitute countable assets or resources and can be considered in determining an individual’s eligibility to receive Medicaid.

Factual BackgroundClaimant sustained a workplace injury on November 25, 2005, for which she received several years of medical treatment paid for by workers’ compensation benefits.  Claimant became eligible for Medicare on November 8, 2009 when she turned 65.  The parties engaged in mediation and resolved the claim via clincher.  As a term of settlement, claimant’s employer agreed to contribute $46,484.12 to fund a Medicare Set-Aside (“MSA”).  The Industrial Commission approved the settlement on April 19, 2011.

When claimant turned 65, she applied for and received assistance with her medical expenses pursuant to Medicaid.  To be eligible for Medicaid, an applicant who is single and over the age of 65 cannot have more than $2,000.00 in countable assets.  If an applicant has more than $2,000.00 in countable assests, he or she is ineligible to receive Medicaid benefits.

On December 27, 2013, the Department of Social Services (“DSS”) terminated claimant’s eligibility for Medicaid on the grounds that claimant’s $46,484.12 MSA funds constituted liquid assets, therefore making claimant ineligible to receive Medicaid based on the aforementioned requirement.

IssueAre the funds in a workers’ compensation MSA a countable resource that can be considered in determining a claimant’s eligibility to receive Medicaid?

AnalysisThe specific eligibility requirement that controls the Medicaid eligibility decision holds that an aged, blind, or disabled applicant for Supplemental Security Income must, in addition to meeting all other eligibility requirements, have no more than $2,000.00 in “nonexcludable resources.”

 The North Carolina Adult Medicaid Manual holds that for purposes of determining an applicant’s eligibility for Medicaid, resources are financial assets that an applicant owns, or has the right, authority, or power to convert to cash and that are legally available for the applicant’s support and maintenance.  Resources are considered available unless the applicant shows evidence of legal restraints such as a judgment or legally binding agreement.

 In accordance with our state Medicaid Manual, the Court of Appeals held that in order for a given asset to be a countable resource, the asset must be legally available to the applicant without legal restriction on the applicant’s authority to use the resource for support and maintenance.

The Court of Appeals held that the funds in claimant’s workers’ compensation MSA were not a countable resource for purposes of determining her eligibility for Medicaid because her use of the funds for her support and maintenance were subject to legal restrictions pursuant to a legally binding agreement; i.e. the clincher.

Holding/takeaway:  Claimant was only allowed to use the MSA for medical expenses arising from her compensable injury for which Medicare would otherwise be liable.  Because of this specific restriction, claimant could not use the MSA funds for her general support and maintenance.  Therefore, the MSA funds were not a countable resource that could be considered in determining her eligibility to receive Medicaid.