IM-26 March 15, 2012; IM-106 November 8, 2007; IM-95 August 26, 2005; IM-73 December 12, 1995
All annuity contracts, including the application page, are to be sent as an attachment with the Request for Clearance (IM-14) through the proper supervisory channels for Income Maintenance programs. The subject line in the email must be “Policy Clearance – Annuity”. Designated staff in each region will review annuities to determine whether the annuity can be excluded as a resource and no transfer penalty imposed. If designated staff have questions, the IM-14 and annuity will be sent to Program and Policy for review.
For definitions of terms related to annuities, refer to Section 1030.030.05 Definitions Related to Annuities.
Annuities are considered a form of a trust and are subject to a sixty month look back period. For transfers occurring on or after February 8, 2006, the beginning date for the period of ineligibility is the first day of the month in which the transfer occurred or the date the individual would have been eligible for institutionalized level of care (were it not for the penalty period), whichever is later.
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 will always have a cash surrender value (CSV). If the MO HealthNet participant or spouse transferred ownership of a revocable annuity to someone other than their spouse without receiving fair and valuable consideration, the full CSV less any consideration received is the amount of the transfer. ‘Fair and Valuable Consideration’ means money, real or personal property, or services received from the person(s) to whom the property was transferred is equal to the CSV at the time of transfer.
Irrevocable annuities have no cash surrender value. The value of the annuity’s income stream may be an available resource to the MO HealthNet participant or their spouse. 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. If the value of the income stream is less than the purchase price, it must be evaluated to determine whether or not a transfer of property occurred.
NOTE: If the income stream of an annuity from which the MO HealthNet participant or their spouse receives monthly income is excluded as an available resource, transfer of property provisions do not apply. Refer to 1030.030.10.10 Annuities That Were Purchased and Began Making Payments on or After August 28, 2007 and 1030.030.10.15 Annuities That Were Purchased and Began Making Payments on or After August 28, 2005, but Prior to August 28, 2007 for guidance on determining if the income stream of the annuity is excluded as an available resource.
If the MO HealthNet participant or their spouse is the owner, but neither of them is the annuitant and neither of them is the beneficiary, then the entire amount of the premium should be considered a transfer of property.
EXAMPLE: Herman M bought a $40,000 annuity for his daughter, Katherine. If his wife, Agnes, applies for MO HealthNet benefits, examine the annuity to see if Herman can recover any of the premium payment. If not, then the policy is considered irrevocable and the $40,000 counts as a transfer of property, effective the date he bought the policy. The full amount of the transfer would count against Mrs. M.
If the current value of an annuity plus the amount of monthly payments the participant or their spouse has already received do not equal the amount of the premiums paid to purchase the annuity, a transfer of property has occurred.
EXAMPLE: Darlene M, age 80, purchased a single premium, irrevocable annuity for $15,000 in May 2006. Ms. M is the owner and receives the annuity payments. The annuity makes small quarterly payments of $25 for 5 years and then a final balloon-style payment. Ms. M named her niece as beneficiary. Ms. M entered a skilled nursing facility in June 2007 and applied for MO HealthNet for the Aged, Blind, and Disabled in July 2007. The State of Missouri is not named as contingent/remainder beneficiary, the annuity does not pay out in equal or nearly equal payments, and it does not exclude balloon-style final payments. Therefore, the income stream of the annuity is considered an available resource. Ms. M furnished documentation that she cannot sell the annuity for the amount of the remaining guaranteed payments. Instead, she can sell it for $300. The $300 is an available resource to Ms. M. However, since Ms. M can sell the annuity for only $300, a transfer of property occurred. The amount transferred is the amount paid for the annuity ($15,000) minus the value of the annuity ($300) and the amount of payments already received ($100). The eligibility specialist determines that Ms. M transferred $14,600.