MEMORANDUM
2005 Memorandums
IM-95     08/26/05

SUBJECT:

ANNUITIES AS AN AVAILABLE RESOURCE OR TRANSFER OF PROPERTY
MANUAL REVISION # 27: SECTIONS 1030.030.05, 1030.030.10, 1040.020.35, 1040.020.35.10 AND 1040.020.35.15

DISCUSSION:

Senate Bill 539 (2005) changed the definition used to evaluate an annuity as an available resource or a transfer of property. The new requirements were added to state statutes as RSMo. Section 208.212. An annuity from which a person (the annuitant) receives monthly income will now be considered an available asset, unless the state of Missouri is named as the secondary or contingent beneficiary. The purpose of this is to allow the state to recover any Medicaid expenditures made on behalf of the annuitant or their spouse, if the annuitant dies prior to receiving all of the guaranteed payments from the annuity. The change is effective August 28, 2005, for all Medicaid categories with a resource limit.

Effective August 28, 2005, the income stream from an annuity which is making periodic monthly payments is considered an available resource unless the annuity:

  1. is actuarially sound as measured against the Social Security Administration life expectancy tables based on the life of the annuitant;
  2. provides for equal or nearly equal payments for the duration of the annuity and excludes “balloon” style final payments; and
  3. names the state of Missouri as the contingent beneficiary status ensuring payment if the individual predeceases the duration of the annuity, in an amount to the Medicaid expenditure made by the state on the individual’s behalf.

Prior to August 28, 2005, the income stream from an annuity is an excluded asset.

ANNUITIES AS AN AVAILABLE RESOURCE

 If an annuity does not meet the 3 conditions listed above, its income stream is considered an available resource. 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 guaranteed payments, its value is the amount it could be sold for. The value of the income stream of an irrevocable annuity belongs to the a nnuitant.

The cash surrender value of an annuity is always considered an available resource.

ANNUITIES CONSIDERED A TRANSFER OF PROPERTY

 Annuities are considered a form of a trust and are subject to a sixty month look back period. If the current value of an annuity (which is considered an available asset) plus the amount of monthly payments the beneficiary has already received do not equal the amount of the premiums paid to purchase the annuity, a transfer of property has occurred. Annuities on which the a nnuitant began receiving periodic monthly payments on or after August 28, 2005 are subject to a transfer of property penalty if all three of the conditions listed above are not met.

For annuities on which the a nnuitant began receiving periodic monthly payments prior to August 28, 2005 a transfer of property penalty would only be imposed if the annuity:

NECESSARY ACTION:

GLS

IM-94  |   2005 Memorandums  |  IM-96