Retirement Funds Any Retirement funds including Employer Sponsored

Retirement Funds Any Retirement funds including: ◦ Employer Sponsored Retirement Plans ◦ Employment-Related Retirement Plans ◦ Individual Retirement Accounts Often have special tax status, i. e. . , deferred taxation

Types of Employer Sponsored Retirement Plans Defined Benefit Profit Sharing Roth 401(k) 401 (k) Keogh SEP SIMPLE or Contribution Plan

Employment Related Retirement Plans Available to employee through employment situation (type of business) ◦ Often supplements other retirement plans Types: ◦ 403 (b) ◦ 457 Funds held in individual’s name and fully available

Individual Retirement Accounts Available to anyone regardless of employment status Types: ◦ IRA ◦ Roth IRA Funds held in individual’s name and fully available

If A/R has retirement plans, ask: Is the owner receiving regular payments, i. e. , a pension benefit? If not, can they? If they are not eligible for payments, is any portion of the principal available

Availability of Retirement Benefits If A/R is receiving periodic payments, these payments are unearned income

Availability of Retirement Benefits, (cont’d) If A/R is eligible for periodic payments, but isn’t receiving them: ◦ A/R must apply for benefits ◦ A/R must choose periodic payments rather than lump sum ◦ A/R must choose maximum amount of payment available ◦ Payments are counted as unearned income

Availability of Principal If A/R is receiving retirement benefit, the principal is considered unavailable ◦ Can not be counted as a resource ◦ Payments are counted as unearned income If A/R can not receive periodic payments, resource value of principal depends on availability

Availability of Funds in Employer Sponsored Retirement Plans In Defined Benefit or Contribution Plans: ◦ Employer contributions are generally unavailable until employee retires ◦ Employee contribution may be available In other pension plans, e. g. , 401 (k), funds held in individual’s name and fully available

Availability of Principal, (cont’d) If A/R cannot withdraw any funds from the principal, the retirement plan is unavailable ◦ Cannot be counted as resource

Availability of Principal, (cont’d) If A/R may withdraw funds ◦ Maximum amount available (less early withdrawal penalties, not including income taxes) is a countable resource

Availability, (cont’d) A retirement fund is exempt as a resource for SSI-R A/R if: ◦ Owned by the non-applying or ineligible spouse, and ◦ A/R is NOT subject to spousal impoverishment

SSI-Related and Spousal Rules In Spousal Impoverishment cases: ◦ The pension funds owned by ineligible or non applying CS are used first to determine MCSRA ◦ Any excess is AVAILABLE to Institutionalized Spouse

Documentation of Retirement Funds SS-R A/R’s who are applying for nursing facility services or CC w/LTC must document: ◦ If asset is a retirement fund ◦ If the A/R is eligible for periodic payments and if so how much and when would they begin ◦ If principal is available and if so, how much; (e. g. is there a penalty or not)

Documentation, (cont’d) SSI-R A/R’s who attest to the value of their resources and own a retirement account: ◦ Must pursue regular periodic payments ◦ Must also prove whether or not payments are available to them ◦ If payments are not available and A/R is excess resources they must provide proof of availability of the principal and how much

Annuities 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

Annuities Individual’s $ Annuity Annuitant/Beneficiary

Why Purchase an Annuity? Investment Retirement Tax Purposes Estate Planning Shelter Assets

Types of Annuities Immediate Annuity Deferred Annuity Fixed Annuity Variable Annuity Tax-Qualified/Non-qualified Annuity

Choices: Pay-in Money paid in over a period Single lump sum payment of time

Choices: Pay-out Periodic payments for life Life annuity with period certain Payments for a number of years

Choices: Pay-out, (cont’d) Payments for life with continuing payments to beneficiary Defer payments Lump sum payout

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 If not receiving payments, can s/he? 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

MA Policy, (cont’d) If not getting periodic payments – and can’t, count principal as a resource, minus penalty, but not minus ordinary taxes

Medicaid Extended Coverage, Total Asset Protection Policies If durational requirements under NYS Partnership for LTC Plan have been met, A/R not required to take or maximize periodic payments ◦ Must pursue amount of available fixed interest income if subject to chronic care budgeting

Medicaid Extended Coverage, Dollar for Dollar Plans If annuity is countable resource, asset protection may be used If annuity value exceeds protected amount, balance is countable resource

Transfer Annuities are treated like trusts in transfer situations, i. e. , 60 month lookback period ◦ Determine when annuity was purchased ◦ Determine when periodic payments began

MA Policy A/R or A/R’s spouse who annuitized an annuity prior to 2/8/06 and within the look-back period will be subject to a transfer penalty unless annuity is actuarially sound

Actuarially Sound Calculations Determine total lifetime payments: ◦ Determine annual payment ◦ Multiply by life expectancy Compare total lifetime payments to annuity principal

Actuarially Sound Calculations (cont’d) If total lifetime payments are not commensurate with principal amount, possible transfer ◦ A/R has right of rebuttal ◦ If not rebutted, difference is UV

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), (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), (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), (cont’d) A/R must receive a copy of the “Disclosure of Annuities” letter to inform A/R of the State’s right to be named remainder beneficiary on the annuity by virtue of the provision of MA

Transfer (annuities purchased or transactions on or after 2/8/06) (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) (cont’d) If annuity is not a countable resource for a MEC A/R with a Dollar for Dollar plan , ◦ 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 transfer

Transfer (annuities purchased or transactions on or after 2/8/06) (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) (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