Annuity Disclosures

Minnesota Health Care Programs applicants and enrollees must disclose if they own an annuity or have the right to receive income from an annuity. A person who requests Medical Assistance (MA) payment of Long-Term Care (LTC) services LTC services include skilled nursing facility (SNF) care, nursing facility care in an inpatient medical hospital or intermediate care facility (ICF, ICF/DD), or services covered by home and community-based waiver programs (CAC, CADI, DD, EW, and TBI). must disclose any interest the person or his or her spouse has in an annuity and provide additional information about any annuity transactions.

Note:  Do not apply the policies described in this section to employment-based pension plans held in the form of an annuity. See Retirement Funds.

MA-LTC Annuity Disclosure Requirements.

Annuity Transactions.

Verification Documents.

When an Interest in an Annuity is Disclosed.

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MA-LTC Disclosure Requirements

A person requesting MA payment of LTC services and his or her spouse must:

l  provide information to determine whether an annuity transaction occurred on or after February 8, 2006, and within the lookback period A specific period for evaluating transfers prior to the date a person requests MA payment of LTC services. for all annuities owned by a person requesting MA payment of LTC services and his or her spouse; and

l  report all annuities for which either spouse is an owner, annuitant The person(s) upon whose life expectancy annuity payments are based. Multiple annuitants in an annuity contract are commonly referred to as joint annuitants or co-annuitants. Not all annuity payments are based upon a person’s life expectancy. See “term certain annuity.” Annuitant sometimes refers to a person who receives periodic payments from an annuity., payee Someone to whom a benefit is paid. Some benefits, such as an annuity contract, may provide for two or more payees. An annuity payee is sometimes called the annuitant; however, a payee may not also be an annuitant., or beneficiary The person named to receive benefits or payments (for example, social security payments or payments from a life insurance policy or trust). For annuities, a beneficiary is the individual, trust, or entity named by the annuity owner to receive death benefits from an annuity..

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Annuity Transactions

An annuity transaction is an action taken by an annuity owner Person(s) who may exercise rights provided in the annuity contract. For example, the owner(s) names the payee(s) who can be an owner or other parties, chooses the settlement option, and names the beneficiaries. related to an annuity. The following annuity transactions that occurred on or after February 8, 2006, but no earlier than the first day of the person’s lookback period, result in the annuity being subject to the policies described in Naming DHS a Preferred Remainder Beneficiary and Evaluation of Annuities under Transfer Policy.

l  Purchasing an annuity.

Purchasing an annuity includes setting up a new annuity, converting an existing annuity into another type of annuity or converting an account-based financial arrangement or other type of fund into an annuity. Examples of an account-based financial arrangement include:

n  Rolling over a deferred annuity into an immediate annuity.

n  Rolling over a 401(k) into an individual retirement annuity.

n  Rolling over an Individual Retirement Account into an annuity.

l  Exercising an annuity election including the following:

1. Annuitizing the annuity.

2. Adding an unscheduled contribution to an annuity, including the rollover of another financial arrangement into an annuity.

3. Elective withdrawals - payments made in addition to the scheduled payments provided in the annuity contract. (A partial surrender is a type of elective withdrawal if the annuity owners must elect to receive the partial surrender.)

4. Changing the distribution from the annuity (that is, how, the amount, or to whom payments are made).

5. Changing the annuity owner, annuitant, payee, or beneficiary, including transferring ownership of the annuity in whole or in part to a trust.

Note:  Assigning a new beneficiary upon the death of a current beneficiary is an annuity transaction.

Exception:  Do not consider a request to name DHS a preferred remainder beneficiary The person or entity required to be named as a beneficiary of a death benefit under an annuity. A preferred remainder beneficiary has preferential rights to the death benefit. of an annuity to be an annuity transaction.

Changes not treated as annuity transactions for purposes of evaluation include:

l  providing an annuity issuer with updated contact information,

l  notification of the death of a named beneficiary,

l  changes that occur automatically based on terms of the annuity contract that do not require a decision, election or action by the annuity owners to take effect,

l  changes to the annuity beyond the control of the person, including but not limited to changes required by law, operational changes instituted by the issuer, or a judgment of divorce or legal separation.

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Verification Documents

Accept the following types of documentation for verification purposes if they alone, or together, provide the required information:

l  a copy of the annuity contract.

l  a written statement from the annuity issuer A person or entity (an insurance company) that manages an annuity. The annuity issuer accepts funds from the owner(s) during the accumulation phase and issues payments after the funds have been annuitized. Banks and financial planners often sell annuity arrangements; however, insurance companies issue annuity-based financial arrangements..

l  if applicable, a written statement from the employer, employer association or union.

Eligibility for MA payment of LTC services cannot be determined until all required information is provided.

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When an Interest in an Annuity is Disclosed

Take the following steps when a person requesting MA payment of LTC services and his or her spouse discloses an interest in an annuity.

1. Request a copy of the annuity contract and other related documents.

2. Send a Required Annuity Information form (DHS-5143) to obtain necessary information if the annuity contract or related documents indicate the annuity was purchased prior to February 8, 2006. Do not determine eligibility for MA payment of LTC services until the person returns the completed, signed and dated form.  

Note:  It is not necessary to send this form if the information is included in the annuity documents or is on the DHS form the client used to request MA payment of LTC services.  

3. Request any additional information not provided with the annuity contract, related documents, or on the DHS-5143 using the Minnesota Health Care Programs Request for Information (DHS-3271) or obtain a release of information from the person to contact the annuity issuer. Evaluate the annuity documents for all of the following to determine whether:

a. to treat payments received from the annuity as unearned income.

b. the person and his or her spouse must name DHS as a preferred remainder beneficiary under the annuity. See Naming DHS a Preferred Remainder Beneficiary for more information.

c. an annuity that is purchased by or on behalf of the person requesting MA payment of LTC services must be evaluated under transfer policy. See Evaluation of Annuities under Transfer Policy for more information.

d. to treat the annuity as an available asset.

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