Pending Insurance Claim Is Not “Available” to ALTCS Applicant


It makes sense that someone seeking to qualify for public benefits would want to argue that they do not have assets available to them. Sometimes, however, an applicant will want to argue that more assets are available, as Charles Smith and his wife did—unsuccessfully.

Mr. Smith, an Arizona resident, was injured in a motorcycle accident in April, 2000. As a result he was hospitalized and ultimately moved to a nursing facility. A year after his injury his wife applied for coverage from the Arizona Long Term Care System (ALTCS), Arizona’s Medicaid program for long-term nursing care.

The ALTCS system calculated that Mr. and Mrs. Smith had assets of $108,421.98 on the date of the accident. That meant that Mr. Smith would not be eligible for ALTCS coverage until the total available assets reached $56,210.99—the so-called Community Spouse Resource Deduction (or CSRD).

Meanwhile, the driver of the car that struck Mr. Smith admitted fault for the accident. Unfortunately, he had no liability insurance. Mr. Smith, however, was covered by two uninsured / underinsured motorist policies, with total coverage of $125,000. Those policies paid out to the Smiths in July, August and December of 2000.

Mrs. Smith, on her husband’s behalf, argued that the insurance coverage should have been counted as an available resource as of the date of the accident. Because the CSRD (the amount the couple would be allowed to keep) is calculated based on the total available resources, inclusion of the insurance proceeds would mean that they would have been entitled to retain $87,000. That would have meant that Mr. Smith would have qualified for ALTCS coverage in February, 2001, rather than May of that year (as he ultimately did), resulting in reimbursement for three additional months of nursing facility bills—perhaps a $10,000 to $15,000 benefit.

Although a hearing officer agreed with Mrs. Smith, ALTCS did not, and the agency set enrollment in the program for the later date. A Maricopa County (Phoenix) trial judge reversed the agency and ruled in the Smiths’ favor.

The Arizona Court of Appeals, however, restored the ALTCS interpretation. The insurance proceeds weren’t actually available on the date of the accident, said the judges—as evidenced by the fact that it took nine months before the claims were finalized and payments received. ALTCS was right to calculate the Smiths’ assets at the lower number. Smith v. Arizona Long Term Care System, January 22, 2004.

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