In the case of Phoebe Williford v. North Carolina Department of Health and Human Services North Carolina Division of Medical Assistance, 2016 WL 6694573 (N.C. App. Nov. 15, 2016) the North Carolina Court of Appeals has sided with the plaintiff in her argument that funds in her WCMSA account, which was funded as a result of personal injury award, are not a countable resource for purposes of determining her eligibility for Medicaid.  Her use of the funds for her support and maintenance is subject to “legal restrictions” pursuant to a “legally binding agreement.”

As you may be aware, “any claimant who receives a WC settlement, judgment, or award that includes an amount for future medical expenses must take Medicare’s interest with respect to future medicals into account.” (WCMSA Reference Guide, May 29, 2014, COBR-M5-2014-v2.2).  (Click here for our comments on considering Medicare’s future interest in a liability settlement).  The parties in the above-captioned case chose to account for Medicare’s future interest via a Workers’ Compensation Medicare Set-Aside arrangement, and determined that Ms. Williford was reasonably expected to require future injury-related medical care in the amount of $46,484.12.  These funds were issued by the defendant and deposited by the plaintiff into a bank account in her name.  The settlement agreement stipulated that Ms. Williford was to “disburse only payments for Medicare-covered expenses which are work related from such account,” among other requirements.  In other words, Ms. Williford agreed to make Medicare secondary to the WCMSA account.

Unfortunately, as plaintiff and defense alike sought to consider and account for Medicare’s future interest, Medicaid took notice of the WCMSA account and terminated Ms. Williford’s Medicaid eligibility on the grounds that the funds in her WCMSA were a countable resource.  Medicaid, a state and federal program, is only available to applicants who meet various requirements and whose income and financial resources are below a specified amount.  In Ms. Williford’s case, she could have no more than $2,000 in liquid assets, such as bank accounts. In the Department of Health and Human Services’ (DHHS’) eyes, the $46,484.12 WCMSA account thrust her far above that threshold.  However, Ms. Williford argued that she was legally required to use the funds to pay for injury-related medical treatment that would otherwise be covered by Medicare. She appealed the termination of her benefits and petitioned to exclude the WCMSA from the calculation of her liquid assets.

After nearly 3 years of appeals, the North Carolina Court of Appeals stated on November 15, 2016 that “federal standards clearly establish 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.” They reversed the Department of Health and Human Services’ earlier decision and concluded that a WCMSA is not a countable resource for purposes of determining petitioner’s eligibility for Medicaid.

Thank you to our friends at the National Academy of Elder Law Attorneys (NAELA) for sharing this decision.  At Shapiro Settlement Solutions, we are committed to ensuring plaintiffs consider all government agencies when settling their personal injury cases.  In Ms. Williford’s situation, she would have been well-served by considering a Special Needs Trust to preserve her Medicaid eligibility. The WCMSA funds could then have been held within the trust, thereby ensuring they were never mistaken for countable assets. Contact us today to discuss the often complicated interplay between various government benefits and how to best protect your clients.

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