The income stream of an annuity from which an annuitant receives regular payments 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 meets all three of the following requirements:
- is actuarially sound as measured against the Period Life table published by the Office of the Chief Actuary of the Social Security Administration, based on the life expectance 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 primary beneficiary or as secondary or contingent beneficiary after the spouse or minor or disabled child and is named as primary beneficiary if the spouse, minor or disabled child, or a representative of such child disposes of any remainder for less than fair market value to ensure payment up to the total of MO HealthNet expenditures for the individual if the individual predeceases the duration of the annuity
If all three requirements are not met, the income stream of the annuity is considered as an available resource to the MO HealthNet applicant/participant.
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.
EXAMPLE: Minnie M, age 82, bought a $60,000 irrevocable annuity on July 1, 2006. She is the annuitant. The annuity pays Minnie $200 per month for 10 years, with a balloon payment of $16,000 on July 1, 2016. The beneficiary is Minnie M’s granddaughter. Minnie M 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 primary beneficiary, the income stream from the annuity must be counted as an available resource to Minnie M. The value of the income stream from the annuity is the amount of the remaining guaranteed payments verified by the policy or the company that issued the annuity. The amount of the remaining guaranteed payments is the total of the guaranteed annuity payments less any payments previously received.
EXAMPLE: Henry F and his spouse, Mattie, purchase an irrevocable annuity on July 1, 2006, in the amount of $100,000. Mr. F is the owner of the annuity. Mrs. F is the annuitant and the person designated to receive payments. The annuity makes equal payments and is actuarially sound. The annuity names the State of Missouri as contingent beneficiary after her spouse. Mr. and Mrs. F apply 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. In this situation, the income from the annuity is considered countable unearned income to Mrs. F.