The income stream of an annuity from which a primary beneficiary (or annuitant) receives monthly income is EXCLUDED as an available resource, if the annuity was purchased and began making payments on or after August 28, 2005, but prior to August 28, 2007, if the annuity:
- is actuarially sound as measured against the life expectancy tables published by the Social Security Administration based on the life of the annuitant
- provides equal or nearly equal payments for the duration of the annuity and excludes balloon-style final payments, AND
- names the State of Missouri as contingent beneficiary ensuring payment of MO HealthNet expenditures if the individual predeceases the duration of the annuity
If the above 3 conditions are not met, the income stream of the annuity is considered as an available resource to the primary beneficiary (or annuitant). The value of the income stream from the annuity is the amount of the remaining guaranteed payments, unless there is documentation that the annuity could not be sold for that amount to a third party. If the annuity cannot be sold for the amount of the remaining guaranteed payments, its value is the amount it could be sold for.
EXAMPLE: Minnie Matthews, age 82, bought a $60,000 irrevocable annuity on July 1, 2006. She is the primary beneficiary (or annuitant). The annuity pays Ms. Matthews $200 per month for 10 years, with a balloon payment of $16,000 on July 1, 2016. The remainder beneficiary is Ms. Matthews’ granddaughter. Ms. Matthews applied for MO HealthNet for the Aged, Blind, and Disabled on May 1, 2007. Because this annuity is irrevocable, there is no cash surrender value. However, because the annuity has a balloon-style final payment and because the State of Missouri is not the remainder or contingent beneficiary, the income stream from the annuity must be counted as an available resource to Ms. Matthews. When contacted, the company that issued the annuity stated the value of the income stream is $38,000. Ms. Matthews is not eligible for MO HealthNet for the Aged, Blind, and Disabled based on excessive resources.
EXAMPLE: Henry Fredericks and his spouse, Mattie, purchase an irrevocable annuity on July 1, 2006, in the amount of $100,000. Mr. Fredericks is the owner of the annuity. Ms. Fredericks is the primary beneficiary (or annuitant). The annuity makes equal payments and is actuarially sound. The annuity names the State of Missouri as contingent/remainder beneficiary. Ms. Fredericks applies for MO HealthNet for the Aged, Blind, and Disabled. There is no CSV for this annuity because it is irrevocable. The income stream is an excluded asset. Budgeting of income from the annuity must be evaluated. Use policy in 0815.030.05 Determining Adjusted Gross Income to determine whether or not income should be counted. In this situation, the income from the annuity is considered countable unearned income to Ms. Fredericks.