Opinion
No. 22-0437
05-03-2024
TEXAS HEALTH AND HUMAN SERVICES COMMISSION, Petitioner, v. ESTATE OF Clyde L. BURT, Linda S. Wallace, Executor, and Linda S. Wallace, Respondents
Brent Webster, Houston, Kara D. Holsinger, Bill Davis, Elizabeth J. Brown Fore, Austin, Atty. Gen. W. Kenneth Paxton Jr., Shawn Cowles, Judd E. Stone II, Laura Diller, Ryan Baasch, for Petitioner. Jacob Hale, Waxahachie, for Respondents.
On Petition for Review from the Court of Appeals for the Third District of Texas
Brent Webster, Houston, Kara D. Holsinger, Bill Davis, Elizabeth J. Brown Fore, Austin, Atty. Gen. W. Kenneth Paxton Jr., Shawn Cowles, Judd E. Stone II, Laura Diller, Ryan Baasch, for Petitioner.
Jacob Hale, Waxahachie, for Respondents.
Justice Bland delivered the opinion of the Court, in which Justice Lehrmann, Justice Blacklock, Justice Busby, Justice Huddle, and Justice Young joined.
To qualify for Medicaid assistance, an applicant’s resources, like cash and assets, must fall below a threshold level. The calculation of resources for this purpose excludes the applicant’s home. The issue presented in this case is whether an interest in property purchased with cash after a Medicaid applicant enters a skilled-nursing facility qualifies as a "home" under federal law, excluding it from the calculation that determines Medicaid eligibility.
The Texas Health and Human Services Commission concluded that the property interest is not excluded, and thus it denied the claim for assistance. The trial court reversed the agency’s determination, and the court of appeals affirmed. The court of appeals held that a property interest created after admission to a skilled-nursing facility can be excluded from the resources used to determine Medicaid eligibility if the applicant states an intent to live at the property in the future. In its view, this is so even though the purchase took place after the Medicaid claim arose, using funds that otherwise qualified as resources for calculating Medicaid eligibility.
644 S.W.3d 888, 895 (Tex. App.—Austin 2022).
42 U.S.C. § 1382(a)(2)(B), (a)(3)(A).
We hold that a "home" is the applicant’s principal place of residence before the claim for Medicaid assistance arises, coupled with the intent to reside there in the future. A property interest purchased with qualifying resources after the applicant moves to a skilled-nursing facility is an available resource for determining Medicaid eligibility under federal eligibility rules, as the property was not the applicant’s principal place of residence at the time the claim for benefits arose. We reverse and render judgment in favor of the Commission.
I
Clyde and Dorothy Burt purchased a house in Cleburne, Texas, and lived there many years. In 2010, however, they sold the house to their daughter and son-in-law, Linda and Robby Wallace. The Burts moved to a rental property the Wallaces owned.
About seven years later, in August 2017, the Burts moved to a skilled-nursing facility. At the time, the Burts had cash assets and cash value in a life insurance policy; both count as available resources for Medicaid eligibility. After moving into the facility, the Burts used these assets to buy an undivided one-half interest in the Cleburne house from the Wallaces. The Burts then executed a Lady Bird deed in favor of the Wallaces. By executing the deed, the Burts granted their newly acquired one-half interest back to the Wallaces, reserving an enhanced life estate. As a result, the Burts’ undivided one-half interest in the Cleburne house reverted to the Wallaces upon the Burts’ deaths. After these transactions, the Burts were left with qualifying resources of $2,016.10, which is under the $3,000 maximum resource threshold for couples to be eligible for Medicaid assistance.
See 20 C.F.R. § 416.1201. The Burts also had railroad retirement income.
644 S.W.3d 888, 890 (Tex. App.—Austin 2022).
The Burts represented in their Medicaid application that they transferred cash and their interest in a life insurance policy to their daughter to purchase their property interest in the Cleburne house for $54,379.18. The parties agree that the Burts’ ownership interest had a market value of $82,048.50, but the Commission does not challenge the purchase as a transfer for less than fair market value. See id. § 416.1246(a), (e) (providing that "[t]ransfer of a resource for less than fair market value is presumed to have been made for the purpose of establishing … Medicaid eligibility" and may be included in an applicant’s resources calculation).
Ante at 282, 284 n.43.
A "Lady Bird deed," also known as an "enhanced-life-estate deed," is "[a] deed that allows a property owner to transfer ownership of the property to another while retaining the right to hold and occupy the property and use it as if the transferor were still the sole owner." Lady Bird deed, Black’s Law Dictionary (11th ed. 2019).
A word of caution: De mortuis nihil nisi bonum. Diogenes Laertius, The Lives and Opinions of Eminent Philosophers 33 (4th cent. A.D.) (quoting Chilon of Sparta, 6th cent. B.C.) (London: G. Bell & Sons, Ltd. 1915). The Burts need not have been ill-motivated to have been wrong on Medicaid law. Actually, they were neither.
47 U.S.C. § 1382b(a)(1).
On the day of the sale, Clyde Burt executed a Form H1245, informing the Commission that he considered the Cleburne house to be his home and principal place of residence, to which he intended to return. Shortly thereafter, he submitted the form along with his and his wife’s joint application for Medicaid nursing-facility assistance. While their application was pending, the Burts died, having never left the skilled-nursing facility. They incurred $23,479.35 in costs for their care.
The Commission denied the estate’s claim for Medicaid assistance. It determined that the Burts’ interest in the Cleburne house was not excludable as a resource for determining Medicaid eligibility. A Commission hearing officer and reviewing attorney upheld the decision. They reasoned that the property interest was not excludable as the Burts’ home because the home had not been the Burts’ residence in the years before they entered the nursing facility.
See 1 Tex. Admin. Code § 358.348; Tex. Health & Hum. Servs. Comm'n, Medicaid for the Elderly and People with Disabilities Handbook F-3000, Home (2021).
1 Tex Admin Code § 358.348.
Linda Wallace, as executor and beneficiary of her father’s estate, petitioned for review in the district court, arguing that the Commission should have excluded the Burts’ interest in the Cleburne house from the Burts’ available resources. Agreeing, the trial court reversed the Commission’s decision.
See Tex. Gov't Code § 531.019. Dorothy Burt is not named as a party. Neither party contends that this affects the disposition of this case.
The court of appeals affirmed, holding that an applicant’s principal place of residence and home for Medicaid eligibility purposes turns on the applicant’s subjective intent. The court of appeals reasoned that "the purposes of Medicaid are better served by allowing an applicant to claim the home exemption for a home he buys while in a nursing facility," because renters and homeowners "will be in the same need of a home upon … discharge from the institution."
Ante at 281.
Id. at 894 (citing Est. of Seffer v. Tex. Health & Hum. Servs. Comm’n, No. D-1-GN-08-000790 (419th Dist. Ct., Travis County, Tex. Dec. 16, 2008)).
20 C.F.R. § 416.1212(c) (emphasis added).
The Commission petitioned this Court for review, arguing that the court of appeals’ expansive interpretation of "home" fails to comport with "home" under state and federal law. We granted review.
II
[1–4] We review the Commission’s denial of Medicaid assistance under the substantial evidence rule. Under that standard, courts first "determine whether the agency’s construction contradicts the statute’s plain language." Statutory interpretation is a question of law we consider de novo. If the Commission’s construction comports with the statute, then a reviewing court should uphold the Commission’s decision "if the evidence is such that reasonable minds could have reached the conclusion that the agency must have reached in order to justify its action."
See R.R. Comm’n of Tex. v. Cont’l Bus Sys., Inc., 616 S.W.2d 179, 181 (Tex. 1981); Tex. Gov’t Code § 531.019(g).
Id. § 416.1212(d) ("If an individual moves out of his or her home without the intent to return, but is fleeing the home as a victim of domestic abuse, we will not count the home as a resource in determining the individual’s eligibility to receive, or continue to receive, SSI payments. In that situation, we will consider the home to be the individual's principali place of residence until such time as the individual establishes a new principal place of residence or otherwise takes action rendering the home no longer excludable.").
Sirius XM Radio, Inc. v. Hegar, 643 S.W.3d 402, 407 (Tex. 2022).
Ante at 283.
Aleman v. Tex. Med. Bd., 573 S.W.3d 796, 802 (Tex. 2019).
Ante at 280.
Tex. Health Facilities Comm’n v. Charter Med.–Dall., Inc., 665 S.W.2d 446, 453 (Tex. 1984) (citing Suburban Util. Corp. v. Pub. Util Comm’n, 652 S.W.2d 358, 364 (Tex. 1983)).
Social Security Administration, Program Operations Manual System SI 01130.100.A.2 (Dec. 28, 2023) (available at https://bit.ly.496h268) (emphasis added).
A
[5–7] Medicaid is a federal and state assistance program that provides medical and skilled-nursing care for qualifying persons. Federal law sets Medicaid’s parameters, and the states enact legislation to Implement the program. In Texas, the Health and Human Services Commission administers Medicaid.
El Paso Hosp. Dist. v. Tex. Health & Hum. Servs. Comm'n, 247 S.W.3d 709, 711 (Tex. 2008); see also 42 U.S.C. §§ 1396 1396w-8.
Ante at 285.
See El Paso Hosp. Dist., 247 S.W.3d at 711; 42 U.S.C. § 1396a; 42 C.F.R. § 430.0.
Id.
El Paso Hosp. Dist., 247 S.W.3d at 712; Tex. Gov't Code § 531.021.
Program Operations Manual System, at SI 01130.100.C.4.
Texas’s methodology for determining income and resource eligibility must be "no more restrictive[ ] than the methodology … under the [federal] supplemental security income program." Under that standard, an applicant’s resources must not exceed $2,000 for an individual or $3,000 for a couple. "Resources" includes "cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance." Under the statute, the Commission must exclude an applicant’s "home (including the land that appertains thereto)" from the applicant’s available resources.
Id. at SI 01130.100.C.5.a. As the Court notes, the Manual provides that the assumption that an alleged home is the individual's principal place of residence may be overcome only when there is "ownership in more than one residence or evidence that raises a question about the matter." Ante at 285 n.50. The Court risks much in reading and applying that provision. First, it ignores that the most natural reading of "evidence that raises a question about the matter", is "evidence that raises a question about ownership". And HHSC doesn’t challenge the validity of the Burts' ownership interest, their life estate, here. Second, having assumed that its reading is correct, the Court points only to its own novel Judicial creation—its prior-occupancy requirement—as "evidence that raises a question". Id. Finally, after having begged the question, the Court also fails to point to anything in the Manual, administrative guidance, or caselaw that supports its interpretation,
Id. § 1382(a)(3).
Id. at SI 01130.100.E.1.
Id. at SI 01130.100.E.2.
And perhaps more than just informative. The U.S. Supreme Court has upheld Congress’s explicit delegation of "broad authority" to the Secretary of the U.S. Department of Health and Human Services "to promulgate regulations defining eligibility requirements for Medicaid." Schweiker v. Gray Panthers, 453 U.S. 34, 43, 101 S.Ct. 2633, 69 L.Ed.2d 460 (1981). Thus, the Secretary’s definition of "available" resources is entitled "to more than mere weight or deference"—it’s entitled to "legislative effect". Id. at 44, 101 S.Ct. 2633. Section 1396a, which governs state-run Medicaid plans is littered with cross-references to the SSI program, and in particular, its resource-counting methodology. See 42 U.S.C. § 1396a(a)(10)(C)(i), (a)(10)(G), (a)(17), (m)(l). For instance, state plans must "comply with the provisions of [§] 1396p", which regulates "transfers of assets", id. § 1396a(a)(18), and incorporates SSI’s definition of "resources" from Section 1382b, id. § 1396p(c)(5) (citing id. § 1382b). Section 1382b itself provides that the Commissioner of the Social Security Administration "shall prescribe" the "time [and] manner in which, various kinds of property must be disposed of in order not to be included in determining an individual’s eligibility for benefits." Id § 1382b(b). Finally, as mentioned previously, the Texas Commission expressly claims to follow the Social Security Administration’s regulatory definition of "home". 1 Tex Admin Code § 358.348(a).
The Commission argues that the Burts’ interest does not qualify as their "home" for Medicaid eligibility. Under the federal statute and federal and state regulations, "home" must be understood as an "actual, lived-in residence"; otherwise, an applicant could exclude any interest acquired after the claim for assistance arises based on the applicant’s declared intent to make it a future home. Because the Burts neither lived in the Cleburne house when they applied for Medicaid assistance, nor lived in it during the period before their entry into the skilled-nursing facility, the value of their interest, acquired using Medicaid-available resources after their admission to the skilled-nursing facility, is not excluded.
Ms. Wallace responds that federal law permits an applicant to use resources to purchase a property interest and designate it as a future "home," if the applicant states an intent to live there in the future. This construction converts funds that qualify as "resources" at the time of the claim into assets that do not, but Ms. Wallace argues that the definition of "home" as a place of residence of the applicant at the time the claim arose makes Texas’s Medicaid program more restrictive than the federal supplemental security income program.
B
[8, 9] We begin by examining the applicable federal law. "In determining the resources of an individual (and his eligible spouse, if any) there shall be excluded … the home (including the land that appertains thereto)." The federal law does not define "the home." "When a term is left undefined in a statute, ‘we will use the plain and ordinary meaning of the term and interpret it within the context of the statute.’ " "To determine a statutory term’s common, ordinary meaning, we typ- ically look first to [its] dictionary definitions …."
644 S.W.3d at 895.
Hogan v. Zoanni, 627 S.W.3d 163, 169 (Tex. 2021) (quoting EBS Sols., Inc. v. Hegar, 601 S.W.3d 744, 758 (Tex. 2020)).
Id.
Tex. State Bd. of Exam’rs of Marriage & Fam. Therapists v. Tex. Med. Ass’n, 511 S.W.3d 28, 35 (Tex. 2017) (citing Epps v. Fowler, 351 S.W.3d 862, 866 (Tex. 2011)).
Gray Panthers, 453 U.S. at 43, 101 S.Ct 2633 ("The Social Security Act is among the most intricate ever drafted' by Congress. Its Byzantine construction ... makes the Act almost unintelligible to the uninitiated.") (internal quotation marks omitted).
[10] "[H]ome" is "one’s principal place of residence: domicile," and "[a] place where one lives; a residence." Accordingly, a home is the principal place in which one lives and resides, not merely a structure in which one possesses a partial ownership stake. At the time the Burts applied for Medicaid, they did not reside in the Cleburne house. Nor was the Cleburne house their principal residence or domicile during the preceding seven years. Under the plain language of the statute, the Cleburne house was not their "home." The Commission’s interpretation is consistent with the plain meaning of the federal statute and no more restrictive than the federal supplemental security income program.
Home, Webster's Third New International Dictionary 1082 (2002).
Home, The American Heritage Dictionary of the English Language 840 (5th ed. 2022).
Id.
In urging the contrary, Ms. Wallace first observes that the statute does not explicitly require occupancy. To reside and live in a place, however, one must occupy it. The statute does not provide an exclusion for real property or homes generally, but "the home." The home connotes a singular location commonly understood to be the place one lives.
42 U.S.C. § 1382b(a)(1) (emphasis added).
Ante at 283–84.
Ms. Wallace also counters that it is common for one to consider a property to be a "home" despite being unable to immediately move into it, as for example, when signing closing documents for a house or when a service member purchases a house while on duty abroad. Those examples feature two residences, one in which the person resides and another that the person intends to occupy or has occupied during the relevant time frame. Because the statute excludes "the home," an applicant must elect a principal residence to the exclusion of all others. Which residence of two qualifying residences may turn on the home-owner’s view of which is the principal one, but both are owned before the applicant files a claim for Medicaid assistance. Absent ownership of multiple residences, "the home" is commonly understood to be the place one resides. The Burts’ principal and only home was their rental house. It was not their daughter’s Cleburne house, in which they purchased an interest using eligible Medicaid resources after their claim for assistance arose, then immediately deeded that interest back to her save a life estate.
Finally, Ms. Wallace argues that an occupancy requirement denies renters the preservation of a home after nursing care. This, she contends, contravenes Medicaid’s purpose of promoting a return to independence. The court of appeals rested its holding on this argument, noting that a renter needs a home upon discharge as much as a homeowner.
See id. § 1396-1.
Spotlight on ABLE Accounts, U.S. Soc Sec Admin. (last accessed Apr. 29, 2024), http://tinyurl.com/2mv8aa8m.
644 S.W.3d at 894.
ABLE accounts can help people with disabilities pay for disability-related expenses, Internal Revenue Serv. (July 25, 2022), http://tinyurl.com/336p wspu.
The statute, however, returns a Medicaid applicant to the type of residence the applicant occupied before the claim for assistance arose. The federal government appropriates Medicaid funds to enable states "to furnish (1) medical assistance on behalf of … aged, blind, or disabled individuals, whose income and resources are insufficient to meet the costs of necessary medical services, and (2) rehabilitation and other services to help such … individuals attain or retain capability for independence or self-care." The resources statute endeavors to calculate the funds available for care based on an applicant’s living situation before the claim for assistance arises; it does not permit the applicant to change the nature of that residence (from renting to owning or from a real property interest to a home) by converting assets that otherwise are available to pay for the applicant’s care once the need for that care arises.
42 U.S.C. § 1396-1.
ABLE Act: What You Need to Know, Soc Sec Matters (Dec. 17, 2020), http://tinyurl.com/3ah36rvp.
This is not the only Medicaid statute that requires residency. For Medicaid applicants residing in an institution, the purchase of a life estate in another’s property is considered an improper transfer of assets unless the applicant "resides" at the life-estate property for at least one year after the date of the purchase. Id. § 1396p(c)(1)(A), (J).
Specifically, without tax consequences and without losing eligibility for government assistance programs like Medicaid.
One way Congress has sought to limit improper asset transfer and ensure recoverability of Medicaid funds is by imposing a "look-back date," which is tied to the date the applicant files for Medicaid, to scrutinize eligibility. As the look-back period illustrates, the period immediately preceding the applicant’s claim is the relevant timeframe for determining eligibility.
Federal law requires states to recover the costs of long-term care paid through Medicaid for certain categories of applicants from the applicant’s estate. See id. § 1396p(b); 1 Tex. Admin. Code § 373.101.
26 CFR § 1.529A-2(h); SSA, Spotlight on ABLE Accounts.
See 42 U.S.C. § 1396p(c)(1)(A), (B). The look-back period is 36 months or 60 months, depending on the circumstances. Id. § 1396p(c)(1)(B)
Home, Texas|able (last accessed Apr. 29, 2024), https://www.texasable.org/.
[11] Congress has sought to preclude artificial impoverishment, repeatedly narrowing Medicaid eligibility to minimize abuse of the program and to conserve government resources for those most in need. "As always, our mandate is to ascertain and give effect to the Legislature’s intent as expressed in the statutory language." The home exemption prevents applicants from having to sell their homes to pay for their care; it does not authorize the conversion of available resources to make them unavailable after the claim for assistance arises. The resources calculation instead does the opposite, requiring liquidation of nearly all assets except a home. If an applicant does not own a home before entering care, then the exclusion does not apply.
Medicaid is for those "whose income and resources are insufficient to meet the costs of necessary medical services" and for "rehabilitation and other services to help such .. individuals." Id. § 1396-1; see also Lewis v. Alexander, 685 F.3d 325, 333 (3d Cir. 2012) ("Individuals have gained access to taxpayer-funded healthcare while retaining the benefit of their wealth and the ability to pass that wealth to their heirs. Congress understandably viewed this as an abuse and began addressing the problem with statutory standards enacted in 1986."); Ark. Dep’t of Health & Hum. Servs. v. Ahlborn, 547 U.S. 268, 291, 126 S.Ct. 1752, 164 L.Ed.2d 459 (2006) ("Congress, in crafting the Medicaid legislation, intended that Medicaid be a payer of last resort.’ " (quoting S. Rep. No. 99-146, at 313 (1985))).
Molly Grace, How people with disabilities can use an ABLE account to buy a house, Business Insider (Dec. 4, 2023, 4:39 PM), http://tinyurl.com/ykr8xn8j; Robin Rothstein & Chris Jennings, How to Buy a Home if You Have Disabilities, Forbes (Aug. 1, 2023), http://tinyurl.com/vwuweduv; Home, IL|ABLE (last accessed Apr. 29, 2024), https://illinoisable.com/; FAQ About ABLE Accounts, Cal Dep’t Soc Servs (last accessed Apr. 29, 2024), http//tinyurl.com/yckactmc (explaining that QDEs may be used for the "[p]urchase of a primary residence"); see also infra note 35.
Paxton v. City of Dallas, 509 S.W.3d 247, 256 (Tex. 2017) (citing TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 74 (Tex. 2016)).
C
[12, 13] The Social Security Administration and the Commission have promulgated regulations designed to comport with the exclusion of the home from an applicant’s resources. When a statute is unambiguous, we apply its plain meaning and need not turn to an agency’s interpretation. The federal and state regulations in this instance, however, align with reading "home" to require residence before the claim for assistance arises.
The Commission is authorized to adopt rules regarding Medicaid’s operation in Texas. See Tex. Hum. Res. Code § 32.021(c). Pursuant to that power, the Commission has promulgated regulations regarding the calculation of resources that follow federal statutory and regulatory standards. See, e.g., 1 Tex. Admin. Code § 358.321(a), (b).
See, e.g., Home, IL|ABLE (last accessed Apr. 29, 2024), ("Having an IL ABLE Account made it possible for me to save to buy my first home" (emphasis added)), ("Now our daughter can save for a wide range of things such as … purchasing an apartment" (emphasis added)).
See Combs v. Roark Amusement & Vending, L.P., 422 S.W.3d 632, 635 (Tex. 2013) ("We give [unambiguous] statutes their plain meaning without resort to rules of construction or extrinsic aids. On the other hand, ‘if a statute is vague or ambiguous, we defer to the agency's interpretation unless it is plainly erroneous or inconsistent with the language of the statute.’ " (quoting Tex. Dep’t of Ins. v. Am. Nat’l Ins. Co., 410 S.W.3d 843, 853 (Tex. 2012))); see also R R. Comm’n of Tex. v. Tex Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 634 (Tex. 2011) (Jefferson, C.J., concurring) ("We do not defer to agency interpretations of unambiguous statutes.").
ABLE accounts, IRS; see also FAQs, Texas|able (last accessed Apr. 29, 2024), https://www.texasable.org/faqs/ ("Any funds you withdraw that [are] used to pay for a Qualified Disability Expense … will [not] be considered an asset for purposes of determining your eligibility for … Medicaid, SSI and SSDI. Any withdrawal for housing expenses that is … spent in the month the withdrawal is received will also [not] be considered an asset for SSI purposes.").
The Code of Federal Regulations defines a "home" as "any property in which an individual … has an ownership interest and which serves as the individual's principal place of residence." The federal regulation thus contemplates current, not future, residency. Similarly, the Texas Administrative Code provides that the Commission "follows [the federal regulation] regarding the treatment of a home, except [the Commission] does not count the equity value of a home that is the principal place of residence of an applicant … if the home is in Texas, and the applicant or recipient occupies or intends to return to the home." It requires that the home currently be the principal place of residence, coupled with an intent to return.
20 C.F.R. § 416.1212(a) (emphasis added).
Ante at 284 n.46.
1 Tex. Admin. Code § 358.348(a) (emphases added).
42 U.S.C. § 1396(a)(17). See Mississippi v. Sullivan, 951 F.2d 80, 83-84 (5th Cir. 1992) ("The structure of the Act supports [the] view that subsection (a)(17) was meant to ensure comparability between groups"; a state "would violate subsection (a)(17) if it had one eligibility rule for the [disabled] group and another for the aged group") (emphasis in original).
[14] Residence is "the act or fact of abiding or dwelling in a place for some time." The Burts did not principally abide or dwell in the Cleburne house. Rather, their principal place of residence before their claim for Medicaid assistance arose was a rental house; thereafter, it was a skilled-nursing facility. Because the Burts did not reside in the Cleburne house in the period before their claim for Medicaid assistance arose, it was not their principal place of residence. Their ownership interest was not concurrent with the Cleburne house serving as their principal place of residence, and therefore it is not an excludable "home" under the federal or state regulations.
Residence, Webster’s Third New International Dictionary 1931 (2002); see also Residence, Black’s Law Dictionary (11th ed. 2019) ("The act or fact of living in a given place for some time.").
Ante at 281 (citing 42 U.S.C. § 1396-1 (stating that the purpose of Medicaid is "to furnish … rehabilitation and other services to help [disabled and disadvantaged families and] individuals attain or retain capability for independence or self-care")).
Demonstrating this concept, the Code of Federal Regulations provides that "[i]f an individual … moves out of his or her home without the intent to return, the home becomes a countable resource because it is no longer the individual’s principal place of residence." Likewise, the Texas Administrative Code provides that one’s principal place of residence is excluded if "the applicant … occupies or intends to return to the home." In other words, if an applicant moves out of his principal place of residence, he must intend to return to that home for it to remain excludable. A later developed "intent to return" to the Cleburne house does not bring the Burts within the exclusion because it was not their residence in the years preceding their Medicaid claim. In other words, the Burts’ ownership, occupancy, and intent to return never coincided in the property before their claim for Medicaid assistance arose.
20 C.F.R. § 416.1212(c) (emphasis added).
42 U.S.C. § 1396p(c)(1)(A) (emphasis added).
1 Tex. Admin. Code § 358.348(a)(1) (emphasis added).
Ante at 282.
The regulations recognize exceptions that illustrate the statutory rule. For ex- ample, an individual who moves out of a principal place of residence with no intent to return because the individual is fleeing domestic violence may exclude it until the individual establishes a new principal place of residence. This subsection does not support the notion that the Burts may maintain a home exclusion for a house they sold years earlier.
Robert Frost, The Death of the Hired Man.
This is not a case about leaving a Medicaid applicant without a home. Presumably the Burts’ daughter did not require her parents to transfer nearly all their worldly possessions to her (including a life insurance policy naming her as the beneficiary) to have a home, or to return to the property they occupied during the years before their claim arose. This instead is a case of generational wealth transfer without payment of medical debt—debt that ordinary citizens owe against the estate’s assets before they inherit. The law limits government assistance to the truly needy and Imposes strict limits on eligibility. The dissent would saddle future generations with obligations to the few who undertake elaborate estate planning to impoverish their elderly parents, at least on paper, after the need for skilled-nursing care arises.
[15] Still another section of the federal regulations lends support to a construction requiring occupancy. Subsection (e)(1)—entitled "[p]roceeds from the sale of an excluded home"—permits an applicant to exclude the’ proceeds from the sale of an excluded residence if they are used within three months to purchase another home. If one sells an excluded home and purchases a new home within three months, it is then "similarly excluded." This allows Medicaid applicants to sell their houses, irrespective of their Medicaid application, so long as the proceeds are invested in a home within three months. This regulation preserves an existing exclusion; it does not create a new exclusion based on future occupancy. Rather, the regulation presumes occupancy of a residence before the claim for assistance arises.
Id. § 416.1212(e)(1).
Id.
[16] Finally, while the regulations count property "that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance" as available resources, they do not conversely exclude available cash converted to purchase a home after the claim arises. Collectively, the regulations align with the law that does not permit post-claim conversion of eligible resources absent a recognized exception.
Id. § 416.1201. Our holding does not interfere with Texas's ABLE account program or ABLE account holders' ability to purchase a home. ABLE accounts are accounts for qualifying disabled individuals. Overview, Texasable, https://www.texasable.org/about/#overview (last visited Apr. 29, 2024). Contrary to the dissent’s discussion, a distribution from an ABLE account for Qualified Disability Expenses, including housing, is not included as an asset for eligibility purposes for programs like Medicaid. See Frequently Asked Questions, Texasable, https://www.texasable.org/faqs7 (last visited Apr. 29, 2024). If an individual with an ABLE account purchases and moves into a home using those funds, it is an excludable principal place of residence.
[17] Ms. Wallace also relies on the Social Security Administration’s Program Operations Manual System to support her argument that an applicant’s subjective intent is all that matters. The Program Operations Manual is "used by Social Security employees to process claims for Social Security benefits." It defines "[p]rincipal place of residence" as "the dwelling the individual considers their established or principal home and to which, if absent, they intend to return."
POMS Home, Social Security Administration, https://secure.ssa.gov/apps10/poms.nsf/Home?readform (last visited Apr. 29, 2024).
Social Security Administration, Program Operations Manual System SI 01130.100.A.2 (2023), https://secure.ssa.gov/apps10/poms.nsf/lnx/0501130100.
[18, 19] The Manual does not have the force and effect of law; it is the statute that controls. Written employee guidance cannot be used to contravene a statute. Even so, Ms. Wallace misapprehends the Manual. While the Manual uses "considers" in defining principal place of residence, it does not negate that one must reside in a house to include it among properties that can qualify as an "established or principal" home. As with absent service members, one may have more than one "dwelling" or residence, but the principal place of residence is the one the individual considers his "established or principal" home. Recognizing as much, the Manual acknowledges that " ‘intent to return’ … applies only to the continued exclusion of property which met the definition of the individual’s home prior to the time the individual left the property." In other words, the property must be the applicant’s principal place of residence before the applicant’s departure with an intent to return to it for it to remain excludable. The Manual also provides that "[p]roperty ceases to be the principal place of residence as of the date that the individual left it with no intention of returning." The Burts left the Cleburne house with no intention to return when they sold it to the Wallaces, living elsewhere for seven years. Accordingly, under the Manual, it had ceased to be their principal place of residence long before the claim for Medicaid assistance arose.
Combs, 422 S.W.3d at 635 (noting that this Court does not defer to an agency interpretation that is "plainly erroneous or inconsistent with the language of the statute").
In the section entitled "How to develop the principal place of residence," the Manual provides that "[a]bsent ownership in more than one residence or evidence that raises a question about the matter, assume that the alleged home is the individual’s principal place of residence." Social Security Administration, Program Operations Manual System SI 01130.100.C.5.a (2023), httpsT7secure.ssa.gov/apps10/poms.nsf/lnx/0501130100 (emphasis added). Here, the Burts did not reside in the Cleburne house, which raises a question about whether it was, in fact, their principal place of residence.
Id. at SI 01130.100.C.7.C. (emphasis omitted).
Id. at SI 01130.100.B.5.
D
[20] Residency is a familiar concept in other areas of the law. While not controlling in the interpretation of a federal statute, we note that requiring physical presence, and not merely future intent, coheres with this Court’s interpretation of residence in areas such as election law and civil procedure. For example, in Mills v. Bartlett, an election law case, we held that "residence cannot be determined by intention alone." While subjective intent plays a role in determining primary residence, "action" is also a factor. Ultimately, "[n]either bodily presence alone nor intention alone will suffice to create the residence, but when the two coincided at that moment the residence is fixed and determined." Similarly, in Owens Coming v. Carter, a case regarding a statute that mandated dismissal of certain asbestos lawsuits brought by non-Texas residents, we held that "although intent is necessary to establish a permanent residence, it alone is not sufficient to establish a permanent residence." The same holds true here. Intent is a necessary element of establishing a home, but intention alone is insufficient. It must coincide with presence at some point. The Burts declared their intent to principally reside in the Cleburne house, but their intent failed to coincide with their physical presence.
377 S.W.2d 636, 637 (Tex. 1964).
Id.
Id.
997 S.W.2d 560, 571 (Tex. 1999) (citing Mills, 377 S.W.2d at 637).
* * *
[21] We hold that a Medicaid applicant’s "home," for purposes of 42 U.S.C. § 1382b, is the applicant’s principal place of residence before the claim for assistance arises, coupled with the applicant’s intent to return to that residence in the future. The purchase of a property interest with Medicaid-available funds after the claim arises does not exclude that interest from the calculation of available resources. Because the Commission did not err in calculating the Burts’ eligibility for Medicaid, we reverse the judgment of the court of appeals and render judgment for the Commission.
Chief Justice Hecht filed a dissenting opinion, in which Justice Boyd and Justice Devine joined.
Chief Justice Hecht, joined by Justice Boyd and Justice Devine, dissenting.
For 36 years, Clyde and Dorothy Burt lived in a home on Green River Trail. They then sold it to their daughter and son-in-law, the Wallaces, and rented another home the Wallaces owned. After seven years there, and a few weeks before them 89th birthdays and 70th wedding anniversary, the Burts moved into a skilled-nursing facility, intending to apply for Medicaid. To be eligible, their resources couldn’t exceed $3,000, excluding their home.1a
So, the Burts repurchased a half interest in their long-time Green River Trail home for fair market value. This purchase reduced their worldly possessions from not quite $65,000 cash to just over $2,000. They completed an HHSC form that same day, stating that they considered Green River Trail to be their "home and principal place of residence", that their absence was "temporary", and that they intended to "return to live in [their] home in the future, if possible." It was not to be. Within three months, Clyde passed from this life, and Dorothy followed two months behind him.
The Burts’ Medicaid application would’ve covered a few weeks’ health costs—a little less than $24,000. But HHSC denied the Burts’ Medicaid application, concluding that Green River Trail couldn’t have been their home because they never lived there after buying the half interest from the Wallaces. The trial court reversed, and the court of appeals affirmed the trial court.2a The Court reverses both lower courts based on its reading of the word "home". But its reading, unlike those of the courts below, conflicts with controlling regulations and the design of the Social Security Act. In the Court’s view, the Burts’ avowed intent of returning to Green River Trail to live out the last of their days wasn’t wise planning and romantic aspiration, but deceptive, "artificial impoverishment" to abuse Medicaid and "saddle future generations with obligations to the few who undertake elaborate estate planning to impoverish their elderly par- ente,"3a all of which is very unfairly said of the Burts.4a I respectfully dissent.
I
The federal statute governing Medicaid eligibility provides that in determining an applicant’s resources, the "home" is excluded5a but doesn’t define the word. The Court looks to dictionary definitions as it often does when statutory terms are undefined. But Texas law provides that in determining Medicaid eligibility, HHSC "follows" 20 C.F.R. § 416.1212 "regarding the treatment of the home".6a That regulation does define "home". Looking to dictionary definitions is thus foreclosed.
Specifically, Section 416.1212(a) defines a "home" as: "any property in which an individual (and spouse, if any) has an ownership interest and which serves as the individual’s principal place of residence."7a The Court argues that "[t]o reside and live in a place, … one must occupy it."8a But Section 416.1212(c) provides that "[i]f an individual (and spouse, if any) moves out of his or her home without the intent to return, the home becomes a countable resource because it is no longer the individual’s principal place of residence."9a The reasonable implication is that if an individual moves out with the intent to return, the home remains his principal residence.
That reading of subsection (c) is borne out by subsection (d), which provides that if a beneficiary flees a home due to domestic abuse, the home nevertheless remains the person’s principal place of residence, even without an intent to return, until a "new" principal place of residence is established. In effect, an intent to return to the home is presumed, however unlikely, until affirmatively rejected, and the home isn’t a countable resource even though the domestic abuse victim has moved out.10a
The Court argues that the Burts couldn’t have intended to return to Green River Trail after buying an interest from the Wallaces because they didn’t reside there in the "years preceding" their Medicaid claim.11a But the Burts had occupied their Green River Trail home before applying for Medicaid—for 36 years. That they’d lived in a rental home for seven years in the interim doesn’t detract from the fact that in acquiring a half interest in the home and entering nursing care, they were hoping to return to their long-time home. It was their very real and poetic goal, as they expressly affirmed. As the Court acknowledges, if the Burts had sold to the Wallaces and rented from them for even one day before repurchasing their half interest in the home, the Court wouldn’t dispute that they were intending to "return" to the home they had long occupied. If anything, being removed from their long-time home for seven years only inspired the Burts to return.
According to the Court, HHSC is concerned that "an applicant [may] exclude any interest acquired after the claim for [Medicaid] assistance arises based on the applicant’s declared intent to make it a future home."12a Whatever the merits of that concern, this isn’t that case.
The court of appeals argued that an applicant’s subjective view of a place as home should control, pointing to the Social Security Administration Program Operations Manual System’s definition of "principal place of residence" as "the dwelling the individual considers [his or her] established or principal home and to which, if absent, [he or she] intend[s] to return."13a The Manual provides, as the Court notes, that the "intent to return" requirement "applies only to the continued exclusion of property which met the definition of the individual’s home prior to the time the individual left the property."14a From this the Court asserts that considering a house a home doesn’t negate an occupancy requirement.15a But the Manual states that a "right to use for life" is evidence of ownership16a and that when an individual owns only "one residence", HHSC should "assume that the alleged home is the individual’s principal place of residence."17a
Importantly, the Manual instructs that an applicant’s "statement" regarding their intent to return is dispositive unless it is "self-contradictory",18a a term the Manual defines clearly and narrowly.19a The Burts’ statement of intent to return to Green River Trail was clear, unambiguous, and internally consistent. Under the Manual, the Burts’ intent to return to their longterm home should not be an issue. The Court’s occupancy requirement thus conflicts with the Manual. The Court discounts the Manual as not having the force and effect of law without acknowledging that given its use in administering the Medicaid program, it should certainly, at the very least, be considered informative.20a All of this should be for another day. Very literally, when the Burts applied for Medicaid, they owned a home they’d occupied before entering a nursing facility, they considered it to be their established or principal home, and they intended to return to it.
II
The injustice the Burts suffer today is only compounded by the Court’s and HHSC’s position: that if only the Burts had bought the half interest in their home from the Wallaces and lived there for a day on their way to the nursing facility—if only they’d acted in reverse order—the value of their interest would’ve been excluded from their assets as a home in determining their Medicaid eligibility. So as long as elderly Medicaid applicants have read today’s opinion, they can avoid falling into the trap that ensnared the Burts. At least some can, as the court of appeals noted:
Under [HHSC]’s argument, an applicant can exempt his home if he lives there for one day before entering a nursing facility, but an applicant living in an apartment and in the process of buying a home who, the day before closing, suffers a fall requiring nursing care cannot.21a
But even if that catastrophe is unlikely, and the Court’s decision were mostly fixable, the court of appeals’ concern lingers:
Such a distinction is not supported by the language found in the various federal statutes and rules, makes no practical sense, and in no way advances the purposes behind the assistance programs in question.22a
The Court’s textually untethered decision carries a high risk of interfering with the especially "intricate"23a and delicate legal machinery of Medicaid, SSI, and other federal programs. For instance, 20 C.F.R. § 416.1212(d) provides that a beneficiary who flees her principal place of residence because of domestic abuse doesn’t lose her benefits, as the prior residence—occupied by her abuser—remains excludable and is still "considered] to be the individual’s principal place of residence".24a That residence remains excludable "until such time as [she] establishes a new principal place of residence".25a Under the Court’s view, however, a beneficiary who was a victim of domestic abuse couldn’t establish a "new principal place of residence" by buying a new home because she never would’ve occupied it before applying for benefits. Thus, she couldn’t intend to "return" there. The Court dismisses the inconsistency as an exception to the occupancy requirement.26a But given that such a requirement is nowhere mentioned in the regulation, the specific treatment of a domestic-violence victim’s home is better read as confirmation that no general occupancy requirement exists than as an exception to one never actually mentioned.
The Court’s judicially created prior-occupancy requirement would also interfere with other federal programs. In 2014, Congress enacted the Achieving a Better Life Experience ("ABLE") Act.27a This Act authorizes the creation of tax-advantaged savings accounts to shelter funds, subject to a funding ceiling.28a Importantly, any qualifying disbursements from ABLE accounts are prohibited from affecting a person’s eligibility for government assistance.
Before ABLE accounts became widely available, "saving money proved challenging for many people living with a disability because [government] programs often have income and resource limits."29a But today, disabled beneficiaries can save and invest substantial sums and may also withdraw funds without penalties30a for Qualified Disability Expenses, a category that includes "[h]ousing" expenses.31a Several states, including Texas,32a have implemented ABLE programs. And many disabled beneficiaries on SSI and Medicaid have since relied on the QDE exemption to buy their first homes.33a
It stands to reason that a new home purchased with ABLE funds must itself be excludable, even though a beneficiary hasn’t previously occupied it. Indeed, that very fact is a feature—not a bug—in the program. The ABLE Act was meant to provide opportunities for financial security and independence previously inaccessible to disabled beneficiaries.
The Court’s prior-occupancy requirement would force disabled beneficiaries (except those fortunate few who’ve already got homes before applying for assistance) into a Hobson’s choice: you may have housing independence, but only if you’re willing to give up your federal aid. Stated differently, once you’re on government assistance, "you’ll own nothing, and you’ll be happy."
This entirely avoidable outcome frustrates one of the Act’s central goals of "improving [the] health, independence, or quality of life [of] designated beneficiaries]."34a It ignores the realities of how this system (as designed) is actually working. Disabled beneficiaries are becoming first-time homeowners without losing their benefits.35a More importantly—in disregard of the Act’s text, which states that "Mousing" counts as a qualified disability expense—the Court renders hollow the promise that QDEs won’t affect a beneficiary’s "eligibility for government assistance programs."36a
The Court offers that its holding "does not interfere" with an ABLE account holder’s "ability to purchase a new home".37a But disabled beneficiaries with ABLE accounts and elderly applicants like the Burts can’t be subject to disparate eligibility criteria under federal law, which requires eligibility standards in state-run programs to be "comparable for all groups".38a The Court’s holding leaves the concern that when an ABLE account holder in Texas purchases a "new" house without having previously resided there, the new house won’t qualify as an excludable "home" for Medicaid eligibility purposes.
I II
Finally, as the court of appeals noted, an occupancy requirement disadvantages renters by denying them, in the Court’s words, "the preservation of a home after nursing care [in contravention of] Medicaid’s purpose of promoting a return to independence."39a Here is the Court’s response:
The [federal Medicaid] statute … returns a Medicaid applicant to the type of residence the applicant occupied before the claim for assistance arose…. The resources statute endeavors to calculate the funds available for care based on an applicant’s living situation before the claim for assistance arises; it does not permit the applicant to change the nature of that residence (from renting to owning or from a real property interest to a home) by converting assets that
otherwise are available to pay for the applicant’s care.
As support, the Court points to the use of a "look-back date … to scrutinize eligibility" but fails to note that under the relevant statute, an applicant is only rendered ineligible for Medicaid by transferring property "for less than fair market value". 40a A look-back date is irrelevant when, as in this case, it is undisputed that the Burts reacquired an interest in their home for fair market value. The Court cites nothing in federal law that would disqualify a Medicaid applicant who has been living in rented space, faces the need for covered medical care, and buys a home to provide for future restoration to healthy and independent life, even if, in so doing, he reduces his resources for eligibility.
To the contrary, as we have explained, federal law incentivizes Medicaid applicants to provide wisely for their future. Federal law cannot be reasonably construed to limit Medicaid applicants’ efforts to care for themselves if they happened to be renters before they applied for benefits. It may be, as the Court observes, that "Congress has sought to preclude artificial impoverishment, repeatedly narrowing Medicaid eligibility to minimize abuse of the program and to conserve government resources for those most in need."41a There is nothing to indicate, however, that Congress perversely provided that the more disadvantaged one is in applying for Medicaid, the less benefit it provides—much less that the benefits structure intentionally discriminates against renters.
*****
"Home," Robert Frost wrote, "is the place where, when you have to go there, They have to take you in."42a Green River Trail was home to the Burts when they applied for Medicaid. I would affirm the court of appeals. I respectfully dissent.