Bulletins

Bulletin, April 2, 2007

On March 1, 2007, the Honorable Patrick R. Joslyn of the Circuit Court of
the State of Michigan, ruled in favor of the Petitioner/Appellant, Virginia
J. Mis against the Michigan Department of Human Services in Case
#06-23722-AA.

The original ruling by an administrative law judge held that the purchase
of the ELCO Pure Endowment Life Insurance Policy was not a life
insurance policy and therefore was a divestment. Medicaid benefits were
denied.

However, in his reversal of the original ruling, the appellate
judge held that ELCO's Single Premium Pure Endowment policy
was, in fact, life insurance as supported by state stature MCL
500.602. Further, he clearly stated ELCO's endowment policy
"has no cash value, is an asset with zero cash value, and is
not a divestment." Arguments supporting the policy's
purchase as one for fair market value in accordance with state
and federal law were upheld. The purchase of this policy was
not a divestment, but rather a conversion of a countable asset
to an exempt asset. The Michigan Department of Human
Services had 30 days to appeal this decision and chose not to
do so.

In a similar case, a New York Appellate Court in the Matter of
Kashmira Shah, 694 NYS 2d 82, 86-7 (AD 2 Dept., 1999)
stated that "...no agency of the government has any right to
complain that middle-class people confronted with desperate
circumstances choose voluntarily to inflict poverty upon
themselves when it is the government itself which has
established the rules that poverty is a prerequisite of
government assistance in defraying the costs of ruinously
expensive, but absolutely essential, medical treatment."

The implications of this decision should carry significant
weight not only in Michigan, but also in other states where
state Medicaid rules similarly follow those of the federal
government. The sale of ELCO's Pure Endowment Life
Insurance Policy is a valuable strategy for those seeking to
achieve Medicaid benefits while preserving the assets
gained from a lifetime of hard work.

You may see and copy the Decision here: Michigan Supports
Endowment as True Life Insurance. In order to read and use
this copy, you will need Adobe Acrobat Reader, available for
free download.

For a further definition of Endowment Insurance, please
see Products.