Annuities Annuity A contract between an insurance company

Annuities

Annuity • A contract between an insurance company and an individual in which the insurer agrees, for a price, to make periodic payments to an individual for a fixed period or for life

Individual’s $ Annuity Annuitant/Beneficiary

Principal • The principal is the amount of assets already paid into the annuity contract plus appreciation and earnings

Annuity Assessment • Is A/R receiving payments? – If so, when started? • If not receiving payments, can s/he access principal? • Pension or non-pension money? • When was the annuity purchased or annuitized? (before or after 2/8/06)

MA Policy • If getting periodic payments – i. e. annuitized income, count these payments as unearned income • The principal is not a countable resource

MA Policy (cont’d) • If not getting periodic payments – but could, A/R must take maximum payment available based on life expectancy

Annuity Transaction • Any action by the individual that changes the course of payment from the annuity or that changes the treatment of the income or principal of the annuity

Annuity Transaction (cont’d) • Includes: – Purchases – Additions of principal – Elective withdrawals – Requests to change the distribution of the annuity – Elections to annuitize the contract

Annuity Transaction (cont’d) • Annuities purchased prior to 2/8/06 which have an election to annuitize on or after 2/8/06 are not subject to DRA rules

Transfer (annuities purchased or transactions on or after 2/8/06) • A/Rs and their community spouses have to disclose any interest they have in an annuity

Transfer (annuities purchased or transactions on or after 2/8/06 and within the five year lookback) (cont’d) • Annuities owned by either the A/R or the CS, when the annuity is not a countable resource, will be treated as a transfer unless: – The state is named beneficiary in the first position OR;

Transfer (annuities purchased or transactions on or after 2/8/06 and within the five year lookback) (cont’d) • Will be treated as a transfer unless: – Second position after community spouse, minor child, or certified disabled child AND; – First position if such spouse or representative of child disposes of any interest for less than fair market value

Transfer (annuities purchased or transactions on or after 2/8/06 and within the five year lookback) (cont’d) • A/R or CS is not required to name the State as beneficiary if the annuity is a countable resource

Transfer (annuities purchased or transactions on or after 2/8/06 and within the five year lookback) (cont’d) • If annuity is not a countable resource, – Treated as transfer unless State is named remainder beneficiary – Any asset protection not used to establish resource eligibility may be used to offset the amount of the transfer

Transfer (annuities purchased or transactions on or after 2/8/06 and within five year lookback) (cont’d) • Annuities purchased by or on behalf of an A/R will be treated as a transfer unless the annuity is: – Retirement Annuity; or – Purchased with proceeds from: • Individual retirement account; or • Simplified employee pension plan; or • Roth individual retirement account

Transfer (annuities purchased or transactions on or after 2/8/06 and within the five year lookback) (cont’d) • Will be treated as a transfer unless: – Irrevocable and non assignable; – Actuarially sound; AND – Paid in equal amounts not deferred, and has no balloon payments