In January of this year, the Western District Court of Pennsylvania issued a summary judgment decision in the case of Zahner, et al. v. Commonwealth of Pennsylvania.

The primary issue in this case was whether “shorter” term annuities are valid under the Medicaid rules, or whether the purchase of one of these annuities constitutes a gift which will result in a period of ineligibility for the Medicaid applicant.  Unfortunately, the district court ruled that the “shorter” term annuities were a gift.

This case was appealed to the Third Circuit Court of Appeals by counsel for the Medicaid applicants, and it was argued before the court on November 19, 2014.  We must now await the court’s decision.

The use of “shorter” term annuities is an affective planning tool to help families protect a portion of their “nest egg” when a loved one is admitted to a nursing home and applies for Medicaid benefits.  Without the use of these annuities, in many situations, families would have to exhaust their entire savings to pay for the nursing home before their loved one could qualify for Medicaid benefits.