Pennsylvania’s Department of Public Welfare, which administers the Medical Assistance or Medicaid Program for the Commonwealth, experienced a huge set back in its efforts to curtail the use of annuities in Medical Assistance Long Term Care (MA-LTC) Planning with the recent Weatherbee v. Richman opinion dated January 22, 2009. 

The Department contested the conversation of Mr. Weatherbee’s “excess resources”, those above the allowable limit, to an immediate, non-assignable annuity which provided an income stream to his non-institutionalized or community souse. The Department contended that this annuity could be sold on the secondary market and thus converted back into an available resource to Mr. Weatherbee, which resource would need to be spent down before MA-LTC benefits could be granted. The Department relied upon anti-assignment provisions in Pennsylvania law found at 62 P.S. Section 441.6. 

The United States District Court for the Western District of Pennsylvania rejected the Department’s argument in ruling on its Motion to Dismiss Mr. Weatherbee’s action for declaratory and injunctive relief. The Court held that the anti-assignment provision in Section 441.6 is preempted by Federal MA-LTC law. 

The Weatherbee holding allows for greater flexibility in MA-LTC planning. Tucker Arensberg, P.C.’s experienced staff, including Nora E. Gieg, former Legal Counsel for the Department of Public Welfare, is available to assist in handling all aspects of Estate, Elder and Special Needs Planning. 

The Court noted that Federal MA-LTC law generally protects the income of the non-institutionalized community spouse from affecting the institutionalized spouse’s eligibility for MA-LTC. 42 U.S.C. Section 1396r-5(b)(1). The Court held that the Department improperly treated the income stream generated by the annuity as an available resource. The Court ordered that the Department is precluded from denying MA-LTC benefits based on the income stream of a qualifying annuity to the non-institutionalized or community spouse. 

The Department experienced a similar setback in the James v. Richman decision. 465 F.Supp.2d 395 (M.D. Pa. 2006), aff’d 547 F.3d 214 (3d Cir. 2008). However, the Weatherbee case is of great import as it involved the Department’s challenge to annuity use under the recently enacted Deficient Reduction Act of 2005 (“DRA”). The Department’s position in Weatherbee was consistent with the spirit of the DRA inasmuch as it attempted to limit the use of public funds to needy individuals of lesser means. However, the Department must effectuate the DRA within the confines of applicable law.

If you have any questions regarding the content of this blog post, please contact Nora Gieg at 412.594.3940 or