Annuities Purchased or Changed on or After February 8, 2006 510-05-70-45-25

(Revised 12/1/19 ML #3569)

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  1. Any payment received from the annuity is income, regardless whether the annuity itself is countable as an asset or is considered a disqualifying transfer.

  2. An annuity is considered changed on or after February 8, 2006 if any action is taken on or after that date that changes the course of payments or the treatment of the income or principal of the annuity.  These actions include additions of principal to the annuity, elective withdrawals, requests to change the distribution of the annuity, elections to annuitize the contract, or similar actions.

  3. The annuity is counted as an available asset in the asset test if the individual has the power to liquidate the annuity, the annuity is revocable, or able to be assigned to another person.
  1. The annuity is considered a disqualifying transfer unless:
  1. The payment option was selected, or the latest change to the annuity was made, prior to the individual's, or the individual’s spouse’s look back date;
  2. The annuity is a qualified employee benefit annuity, and the Department is named as the remainder beneficiary in the first position for at least the total amount of Medicaid paid on behalf of the annuitant or the annuitant’s spouse. The Department may be named as the remainder beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or child disposes of any such remainder for less than fair market value;
  3. The annuity:
  1. Provides substantially equal payments, no less frequently than annually, such that the total annual payment is any year varies by five percent or less from the total annual payment of the previous year and does not provide for a balloon or deferred payment of principal or interest;
  2. The annuity will return the full principal and interest within the annuitant's life expectancy; and
  3. The Department is named as the remainder beneficiary in the first position for at least the total amount of Medicaid paid on behalf of the annuitant or the annuitant’s spouse. The Department may be named as the remainder beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or child disposes of any such remainder for less than fair market value; or
  1. The annuity is a third party annuity.
  1. The uncompensated value of an annuity that is considered a disqualifying transfer is an amount equal to the remaining payments due from the annuity (or the applicant or recipient can show the outstanding principal amounts due, if that information can be attained).

  2. The date of the disqualifying transfer is the date the payment option was selected on the annuity, or if later, the date the annuity was changed so the annuity could no longer be surrendered.

  3. When the Department is entitled to be the remainder beneficiary of an annuity purchased or changed on or after February 8, 2006, the “Notice to Insurer of Annuity” (SFN 1186) (05-100-96) must be sent to the company that issued the annuity. The notice must be sent and verification received back from the company, prior to approving the Medicaid application, or if an ongoing case, when the annuity is reported.