The Game of
Start to Finish.
Health Care Education Unit
Health Care Eligibility and Access
Sept 28-29, 2011
Roll The Dice and
• You will be able to identify the parties associated
with an annuity.
• You will evaluate an annuity as an asset for basic
• You will determine the effect of annuitization of an
annuity on basic MA and the MA payment of LTC
• You will evaluate an annuity for uncompensated
transfers and determine that calculation.
Definition of Annuity
is a purchased
contract in which one
party agrees to pay the
purchaser, or a
designee (payee), a
return on money
deposited with them
according to the terms
of the contract.
HCPM 19.25.30 Annuities 4
Types of annuities
Burial – Contract with an issuer
to fund a burial.
Retirement – Employer-funded or
Pension plan (Defined Benefit).
Investment – self-funded IRA, or
a personal savings plan.
Investing for the future
Parties (players) of an
Issuer – a person or entity (an
insurance company) who
manages the annuity. The
annuity issuer accepts the funds
from the owner during the
accumulation phase and issues
payments after the funds have
been annuitized. (The Banker)
Parties of an annuity-
Owner(s) – Person(s) who may
exercise rights provided in the
The owner names the payee(s).
The owner chooses the settlement
The owner names the beneficiaries.
Parties of an annuity-
Payee – Someone to whom a benefit is
Beneficiary – The person, trust or entity
named by the annuity owner to receive
death benefits from the annuity.
Annuitant – The person upon whose life
expectancy annuity payments are based…
Not all annuity payments are based upon a
person’s life expectancy.
Stages of an annuity
Purchase the Immediate: the
annuity by setting periodic payments
up a contract with begin within one
the issuer. payment interval of
payments begin in
the future. A
has two phases. 10
Accumulation 1. The contract is
2. The principal
Annuitization 1. Settlement
phase (payout option is chosen.
phase) 2. Defines payments
and time period.
Annuity Stage -
• Immediate or deferred
• Fixed or variable So Many Questions !!!! How
do I find the answers?
payments Do I really need to know the
answers for MA eligibility
• Term Certain or Life determination?
Verification – Annuity Data
Worksheet (DHS-5532) may help
A copy of the annuity contract.
Contract Specification page.
It may be necessary to get a
signed release. 13
Burial, Retirement, Investment.
Immediate or Deferred.
Owner, payee, beneficiary.
Has annuitization occurred.
Verify as an asset – counted or
unavailable – if asset limit.
Verify if an income source.
Verify as an asset – excluded,
counted or unavailable.
Verify as an income source.
MA Payment of Long-Term Care
Services (in addition to Basic MA
Funding source (DHS-5143)
Annuity Transaction (DHS-5143)
Date of purchase
Date of annuitization – if applicable.
Date of Annuitization
Cash value on date of
Current cash value, if available.
Current market value, if
If a commuted cash value is
Verificationof annuity is not
required as an asset if counted
assets are within the asset limit.
If income source, verify payments.
Annuity Data Worksheet
Information gathering purpose.
How far to proceed is program-
dependent; and in relation to
where the annuity is within its
Developed for when there is a
request for MA payment of LTC
Annuity Data Worksheet
Identifier – contract number
Is there an annuity payee?
Review of Contract
Identify the parties.
Identify the type of annuity for
current policy application.
Determine asset implications.
Determine income to apply if
Apply LTC requirements.
Sinclair and Mary
Mary Jefferson is applying for
MA for herself, her husband, and
her grandson- Dion.
She is income eligible.
She has an annuity and a small
Mary Jefferson Annuity
Owner Mary Jefferson
• Found on the Contract Specification Page.
Issuer Transamerica Life Insurance Company
• Found throughout the contract: front page, also specification page.
Payee Mary Jefferson
• Found on Contract Specification Page as the Proposed annuitant.
Mary Jefferson –
MA Relative Caretaker basis.
1. Annuity Issuer: 1. Transamerica Life
2. Owner: 2. Mary Jefferson
3. Identifier: 3. A102-SJ
4. Date of Purchase: 4. 3/1/10- n/a
5. Purchase price: 5. $1,000 – n/a
6. Payee: 6. Proposed – Mary
7. Beneficiary: 7. JoAnn Larson
MA Considerations -
Asset and/or Income
Immediate – Deferred –
Revocable, Accumulation phase-
Assignable – cash value – asset.
determine as an
Annuitized – - available as an asset.
determine as Income stream after
income stream annuitization.
A Request for MA
Payment of LTC Services
Disclosure requirements and
treatment of certain annuities
when there is LTC services
Implemented under the federal
Deficit Reduction Act of 2005.
Three requirements to be applied.
Information to determine whether an
annuity transaction occurred in the 60
month lookback period, for all annuities
owned by person requesting MA payment
of LTC services and their spouse.
Report all source information for annuities
for which either the spouse or the
applicant is an owner, annuitant, payee, or
Annuity transaction: Definition:
• Purchase of an annuity.
• Conversion of another A qualified action taken
type of asset to an by an annuity owner on
annuity. an annuity.
• Conversion of annuity to Occurred within the
another type of annuity. lookback period- 60
• Exercising an annuity months.
election: annuitization, Or occurred while the
contributing additional client is an MA-LTC
distribution or changing
any of the parties. 30
Assist in obtaining disclosure
Not required, if information can
be obtained in contracts or other
Begins the evaluation process
for requirements 2 and 3.
Requesting LTC services
Married to Mary Jefferson.
Mary Jefferson owns an annuity.
as an asset with CSV for
Mary’s MA request.
Additional requirements for LTC. 32
Information about funding – we
have a verbal client statement
from Mary. The DHS-5143 is not
a required form.
An annuity transaction occurred
with the purchase of the annuity.
2. Naming DHS as PRB
Preferred Remainder Beneficiary
Requesting LTC services.
At least one annuity transaction
within lookback period.
Annuity provides for a death
benefit and allows someone other
than a spouse to be named.
DHS-5036A - spouse
DHS-5037 – continued.
Step by step: 1. Gathered information.
2. Confirmed necessary action.
3. Received signatures DHS-5036.
4. Sent off the DHS-5037.
5. Transfer evaluation - side trip.
3. Evaluation under
Uncompensated Transfer policy is
applied when the individual applies for
MA-LTC, not when the transfer occurred.
The individual must be “otherwise
eligible” for MA payment of LTC services
to begin the penalty period.
3. Evaluation of transfer
Annuities for individuals not “otherwise
eligible” for MA payment of LTC services are
not evaluated for an uncompensated
Excess assets exist.
Spenddown not met.
Home equity limit over $506,000 and not
Not cooperating to name DHS as the PRB.
The PRB and DHS
Finishing the process of naming
DHS as the preferred remainder
The DHS-5037 is returned and DHS
has been designated the PRB or the
death benefit could not be assigned.
Send a copy of the DHS-5037 to DHS
Special Recovery Unit.
PRB and DHS
The DHS-5037 is returned but indicates
DHS cannot be named as PRB for a reason
other than the death benefits are not
Evaluate reason using HCPM 22.214.171.124.
Send documentation and release with a
HealthQuest if necessary.
Client must be cooperating.
PRB and DHS
DHS-5037 is returned and indicates the
client is not cooperating with the annuity
Deny or close MA-LTC.
Determine period of ineligibility.
Update MMIS RLVA - using A code, to
block payment of LTC services.
Notify case manager/facility with DHS-
5181 or DHS-3050. 49
Uncompensated transfer penalty
periods begin when the client is
otherwise eligible for MA-LTC.
An uncompensated transfer
could occur as an annuity is
REMEMBER – side trip
Two Possible Methods of Evaluation –
The annuity is annuitized, so there is no
access to the principal. It is an income
The annuity in the accumulation phase is
an available asset, not a transfer.
Annuity must not be assignable or
IF at any point you cannot answer “YES”, an
uncompensated transfer period will need to be
determined using the total amount of annuitized
funds, less any compensation already received.
1. Annuity was purchased with the funds
of the LTC client.
2. The LTC client is the payee.
3. An annuity transaction occurred in the
4. The annuity is not an IRA account.
1. Annuity was purchased with funds of LTC
client or their spouse.
2. Annuity was annuitized during lookback period
or while client was an MA-LTC enrollee and not
evaluated under Method 1.
3. Annuity provides for equal monthly payments
and these are not deferred.
4. Actuarially sound.
HCPM 126.96.36.199: Evaluation of Annuities under
Transfer Policy 58
An annuity is actuarially sound if
the cash value on the date of
annuitization is expected to pay
out in full within the expected
lifetime of the person requesting
MA-LTC services or of their
1. Annuity’s cash value on date of
2. Total annuity payout.
a) Annual payment amount.
b) Appropriate SSA Life Table or term-
certain length. (who is the
c) Multiply a. by b.
Determination – continued
3. Compare the total annuity payout (2) to
the annuitized cash value (1).
• If the total annuity payout is greater
than or equal to the annuitized cash
value the annuity is actuarially sound.
• If the total annuity payout is LESS
than the annuitized cash value the
annuity is not actuarially sound and
an uncompensated asset transfer has
Immediate Annuity with Trivento
James is 59 and making application
for MA-LTC (CADI waiver).
Screened for CADI, and referred to
SSA and SMRT.
He has no other income but annuity
income and he has no other assets.
James Annuity Data
Is James eligible for MA-LTC
through the CADI program?
Does DHS need to be named PRB?
Evaluation of annuity as a transfer?
James must cooperate in naming DHS as PRB before
approval of MA-LTC services (CADI program) by
completing and signing a DHS-5036.
• Referral for SSI/ RSDI would be required, as assets
are $0 and income is currently below the SSI
Playing with Annuities
We have rolled the dice and learned
about all the players in this game of
We have explored different types of
We have evaluated two annuities as an
asset for MA.
We have determined the effect of
annuitization on basic MA and the MA
payment of LTC Services.
We have reviewed the Transfer
Evaluation Flowcharts and determined if
an annuity was actuarially sound. 66
Nothing to be
One step at a time!