Medicaid Denied Due to Land the Applicant Cannot Sell - Considering Asset Illiquidity

 

An Ohio appeals court has ruled that a Medicaid applicant’s land is a countable resource even though the applicant  is unable to sell the land. Cowan v. Ohio Dept. Jobs & Family Servs. (Ohio Ct. App., 1st Dist., No. C-200025, May 26, 2021).

Mary Cowan entered a nursing home, applied for Medicaid, and named the nursing home as her authorized representative. Ms. Cowan owned two parcels of land that she listed for sale, but she was unable to find any buyers. The county auditor, however, valued the parcels at $3,000 each. 

Unless an exclusion applies, Ohio’s Medicaid guidelines provide that individuals are not eligible for benefits if the value of their personal and real property exceeds $2,000. The $6,000 value assessed by the county auditor exceeded the regulatory threshold, so the state denied her Medicaid benefits for excess resources due to the property.

Ms. Cowan appealed, through the state administrative process, arguing that because she couldn’t sell her land, she did not have the legal ability to access the resource. She argued that Federal SSI regulations explicitly state that a property that cannot be liquidated is not a resource. The state denied the appeal, and Ms. Cowan appealed to court. The trial court ruled that Ms. Cowan had excess resources. Ms. Cowan appealed.

The Ohio Court of Appeals, First District, held that the state properly denied Ms. Cowan’s Medicaid application for excess resources.  The Court held that the federal SSI regulation does not apply to the state Medicaid case. According to the court, under state Medicaid law, “if the applicant has the legal authority to sell the property, the plain language of the Code renders it a countable resource.”  Ms. Cowan had the legal authority to sell the property, evidenced by the fact that she tried to sell the property.  The court noted that Ohio clearly concerns itself neither with practical value, or the ability of the seller to find a buyer: “[w]hether [the applicant] was able to find a purchaser is a wholly different consideration from what the regulation contemplated, namely whether [the applicant] had the legal authority to sell the properties in the first place.” In other words, even if the asset is illiquid (cannot be readily converted to cash) the asset is, nonetheless, countable and potentially disqualifying.  

The case illustrates the importance of considering the illiquid assets comprising the estate, and dealing with these assets before they create challenges or liabilities.