IM-26 March 15, 2012; IM-106 November 8, 2007; IM-95 August 26, 2005; IM-73 December 20, 1995
EXCEPTION: Do not apply these provisions to annuities purchased for a community spouse or institutionalized spouse when determining eligibility for MHABD vendor or HCB benefits for annuities that were purchased or began making payments on or after April 20, 2010 (see Section 1030.030.10 Determining Eligibility for MHABD Vendor or Home and Community Waiver Services for Annuities That Were Purchased and Began Making Payments on or After April 20, 2010 When There Is a Community Spouse).
Revocable annuities A revocable annuity contract can be surrendered and the funds in the account withdrawn. Insurance and annuity companies frequently refer to a revocable annuity as a “deferred” annuity or as a tax-deferred annuity account.
The cash surrender value of an annuity owned by the MO HealthNet applicant/participant or spouse must be determined. The cash surrender value (CSV) minus any surrender fees or other charges, is counted as an available resource to the owner of the annuity (see 1030.030.05 Definitions Related to Annuities). The cash surrender value is entered in FAMIS from the SELFRES/FMWB screen Resource Class LR LIQUID RESOURCE, Resource Type AN ANNUITY. Comments must be entered from the Liquid Resource (FMWO) screen to document the verification received and the computation of the CSV.
If the MO HealthNet applicant/participant or the spouse is not the owner of the annuity contract, then none of the annuity’s CSV is a resource to the applicant/participant even when the MO HealthNet applicant/participant or the spouse is the annuitant (see 1030.030.05 Definitions Related to Annuities), or the person designated to receive the payments.
If the MO HealthNet participant or spouse transferred ownership of a revocable annuity, refer to Section 1040.020.35 Annuities Resulting in a Transfer of Property to determine if a transfer penalty should be applied.
EXAMPLE: Mrs. B applied for MO HealthNet for the Aged, Blind, and Disabled in June 2007. Mr. B bought a revocable annuity for $50,000, also in June 2007, which can be surrendered with a 7% surrender charge in the first year. Consider $46,500 ($50,000 – $3,500) as an available resource.
EXAMPLE: Herman M bought a $40,000 annuity for his daughter, Katherine. Katherine applied for MO HealthNet for the Aged, Blind, and Disabled. Because Katherine is not the owner of the annuity, do not consider any of its value as an available resource to her. Payments that she receives would be included as income.
EXAMPLE: Michelle J purchased a $100,000 revocable annuity for herself in July 2005. On December 14, 2005, she transferred ownership of the annuity to her son. On June 3, 2006, Michelle applied for MO HealthNet for the Aged, Blind and Disabled Vendor benefits. She entered the nursing facility on May 25, 2006. Although Michelle J is not the owner of the annuity, because she transferred ownership of the annuity and it is revocable, a transfer penalty must be explored.
Irrevocable annuities have no cash surrender value, but must be evaluated to determine if the income stream of the annuity (see 1030.030.05 Definitions Related to Annuities) is considered as an available resource. The value of the income stream of an irrevocable annuity belongs to the person or entity receiving the payments. 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.
The value of the remaining guaranteed payments is entered in FAMIS from the Select Financial Resource SELFRES/FMWB screen Resource Class LR LIQUID RESOURCE, Resource Type AN ANNUITY. Comments must be entered from the Liquid Resource FMWO screen to document the verification received and the determination of the value of the income stream. See the Sections 1030.030.20.10, 1030.030.20.15, and 1030.030.20.20 that follow to determine if the income stream is included as an available resource, or if the MHABD exclusion reason PP PER POLICY must be entered.