ANNUITY EXAMPLES ANSWERS 1182022 Maximizing Annuity Payments Male

ANNUITY EXAMPLES ANSWERS 1/18/2022

Maximizing Annuity Payments Male applicant, age 71 Principal = $73, 000 1/18/2022

Maximizing Annuity Payments Answer: $73, 000 ÷ 12. 13 $ 6, 018. 14 ÷ 12 $ 501. 51 1/18/2022 principal life expectancy, male 71 maximized yearly payments months maximized monthly payment

MEC Dollar For Dollar Plans & Annuities Applicant has $160, 000 total countable resources $70, 000 Annuity $90, 000 “Other” Countable Resources Dollar for Dollar Plan has paid out $120, 000 1/18/2022

MEC Dollar For Dollar Plans & Annuities Answer: $ 70, 000 + 90, 000 160, 000 - 120, 000 $ 40, 000 - 13, 800 $ 26, 200 annuity “other” resources countable resources protected assets resources counted toward eligibility MA level for 1 excess Resources Since this annuity is a countable resource at time of application for MEC, the Dollar for Dollar Partnership policy/certificate holder may use the asset protection earned by the Partnership insurance to establish resource eligibility Since the Dollar for Dollar asset protection is not sufficient to disregard the entire value of the annuity, the portion of the annuity value not disregarded is a countable resource The applicant would not be required to maximize his/her payments on the annuity regardless of whether the Dollar for Dollar asset protection is sufficient to disregard the entire value of the annuity or not 1/18/2022

Annuity & Transfer Female applicant applies today Annuitized an annuity 12/05 @ age 73 Payments of $200/month Principal was $150, 000 1/18/2022

Annuity & Transfer Answer: Annuity annuitized before 2/8/06 $ 200 x 12 $ 2, 400 x 13. 28 $31, 872 monthly payment months yearly payments life expectancy @ 73 lifetime payments $150, 000 - 31, 872 $118, 128 principal @ time annuity is annuitized lifetime payments uncompensated transfer 1/18/2022

Annuity & Transfer Female applicant Annuitized an annuity 10/1/05 @ age 63 Payments are $807/month Principal was $200, 000 1/18/2022

Annuity & Transfer Answer: $ 200, 000 ÷ 20. 63 $ 9, 694. 62 ÷ 12 $ 807. 89 principal life expectancy @ 63 yearly maximized payments monthly maximized payments This annuity is actuarially sound and not considered an uncompensated transfer. Since there are no transactions on or after 2/8/06, DRA Rules do not apply. Therefore, the A/R would not have to name the State as beneficiary on this annuity 1/18/2022

Annuity & MEC Dollar For Dollar Plan 79 year old male Applicant for MEC has $250, 000 paid out by plan Otherwise eligible January 2010 Purchased a $160, 000 annuity July 2006 Receiving maximized payments of $1700/m that started December 2009, and refuses to name the State as beneficiary $110, 000 total countable resources 1/18/2022

Annuity & MEC Dollar For Dollar Plan Answer: $250, 000 - 110, 000 $140, 000 paid by plan countable resources remaining asset protection $160, 000 - 1, 700 $158, 300 - 13, 800 $144, 500 - 140, 000 $ 4, 500 annuity transfer payments received uncompensated transfer MA level for 1 remaining transfer remaining asset protection uncompensated transfer The district must note in the case record that $140, 000 of the DDAP was used to offset a transfer of assets as this amount cannot be reused at renewal. At renewal, resource eligibility will be determined using a DDAP of $110, 000 ($250, 000 $140, 000). 1/18/2022

Balloon Payment $200, 000 Annuity Applicant – Life Expectancy 20 years (240 months) Payments $100/month for 239 months 240 th month “balloon payment” of $176, 100 1/18/2022

Balloon Payment Answer: $ 100 x 239 $ 23, 900 monthly payment months of payments total monthly payments $ 23, 900 +176, 100 $200, 000 total monthly payments balloon payment 1/18/2022

Annuity & Transfer Male Applicant Purchased a $70, 000 deferred annuity in 2005 Payment of $625/m deferred until June 2010 Payments of $625 began June 2010 @ 76 years of age 1/18/2022

Annuity & Transfer Answer: $70, 000 ÷ 9. 29 $ 7, 534. 98 ÷ 12 $ 627. 92 purchase price life expectancy @ 76 yearly payments months maximized monthly payment This annuity is actuarially sound and not considered an uncompensated transfer. Since no transactions have occurred on or after 2/8/06 DRA rules do not apply in this situation, therefore, the A/R would not have to name the State as beneficiary on this annuity 1/18/2022

Annuity & Transfer Male Applicant September, 2010 In receipt of nursing home services And otherwise eligible October, 2010 Purchased a $75, 000 annuity 2003 Payments of $995/m deferred until November 2007 Payments of $500/m started 11/1/07 @ 82 years old 1/18/2022

Annuity & Transfer Answer: $75, 000 ÷ 6. 42 $11, 682. 24 ÷ 12 $ 973. 52 purchase price life expectancy, male @ 82 yearly maximized payments monthly maximized payments This annuity has a transaction after 2/8/06 (deferred payment of $995 changed to $500) therefore it must be irrevocable and non assignable, actuarially sound, with equal payments and no deferral and balloon payments. This annuity does not meet these requirements because it is not actuarially sound. Therefore the purchase price of the annuity less any monies actually received from the annuity is considered an uncompensated transfer. The applicant has received 35 months of payments (November 2007 – September 2010) $500 x 35 = $17, 500 $ 75, 000 purchase price - 17, 500 payments received $ 57, 500 uncompensated transfer 1/18/2022