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Effective: May 1, 2009 |
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19.25.30.10ar1 - Naming DHS Preferred Remainder Beneficiary (Archive) |
Archived: December 1, 2010 |
When a person requests MA payment of long-term care (LTC) services, the person and his or her spouse must name DHS as a preferred remainder beneficiary of their annuity, if an annuity meets certain requirements.
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.
Preferred Remainder Beneficiary.
When Must a Client Name DHS a Preferred Remainder Beneficiary.
Failure to Name DHS a Preferred Remainder Beneficiary.
Requirements for Annuity Issuers.
Forms Required to Name DHS a Preferred Remainder Beneficiary.
Steps for Naming DHS the Preferred Remainder Beneficiary.
Calculating a Period of Ineligibility for MA Payment of LTC Services.
Change in Annuity Income or Preferred Remainder Beneficiary.
Preferred Remainder Beneficiary
The preferred remainder beneficiary is 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. As the preferred remainder beneficiary, DHS may receive up to the total amount of MA paid on behalf of the person and his or her spouse when a death benefit becomes payable under the terms of the annuity contract.
DHS is a secondary beneficiary if the client’s spouse, child under 18, or a disabled child of any age (based upon the criteria of the Supplemental Security Income (SSI) program) is named a beneficiary under the annuity and is alive at the time the death benefit is payable.
When Must a Client Name DHS a Preferred Remainder Beneficiary
People who request or renew eligibility for MA payment of LTC services and their spouses are required to designate DHS as a preferred remainder beneficiary for each annuity that meets all of the following criteria:
l They have an ownership interest in the annuity,
l At least one annuity transaction occurred on or after February 8, 2006, and within the lookback period, and
l The annuity provides for a death benefit and allows someone other than a surviving spouse to be named a beneficiary.
Note: Require verification from the annuity issuer if a client or his or her spouse claims it is not possible for DHS to be named a preferred remainder beneficiary.
Failure to Name DHS a Preferred Remainder Beneficiary
People who fail to follow the steps required to name DHS as a preferred remainder beneficiary are ineligible for MA payment of LTC services for a specified period based on the value of the annuity. See Calculating a Period of Ineligibility for MA Payment of LTC Services.
Requirements for Annuity Issuers
Annuity issuers are required to communicate certain information to county and state agencies about annuities that designate DHS as a preferred remainder beneficiary. Annuity issuers who receive a signed and dated "Issuer of Annuity Notice of Obligation" (DHS-5037) are required to:
l confirm that DHS has been named a preferred remainder beneficiary.
l notify the county agency of changes made to the amount of income or principal being withdrawn from the annuity and to the beneficiary designation by the annuity owner.
l inform DHS when the death benefit becomes payable and request the amount of MA subject to recovery by DHS.
l describe a valid reason why it is not possible to name DHS a preferred remainder beneficiary.
Note: Non-cooperation with the issuer to name DHS a preferred remainder beneficiary of the annuity is not a valid reason for DHS not to be named a preferred remainder beneficiary.
Forms Required to Name DHS a Preferred Remainder Beneficiary
Use the following forms as indicated to name DHS as a preferred remainder beneficiary. Determine which forms are needed for each annuity as described below.
l Annuity Beneficiary Designation Form - Annuity Owner Seeking Payment of Long-Term Care Services (DHS-5036). Use this form when the person requesting MA payment of LTC services owns the annuity individually or jointly with his or her spouse or someone else.
l Annuity Beneficiary Designation Form - Annuity Owner is the Spouse of Person Seeking Payment of Long-Term Care Services (DHS-5036A). Use this form when the spouse of the person requesting MA payment of LTC services is the owner of the annuity, or is a co-owner of the annuity with someone other than the person requesting MA payment of LTC services.
l Issuer of Annuity Notice of Obligation (DHS-5037). Send this form directly to the annuity issuer along with the signed DHS-5036 or DHS- 5036A. The DHS-5037 provides the annuity issuer instructions regarding:
n naming DHS as a preferred remainder beneficiary,
n completing the Confirmation/Status of Request portion of the form and returning it to the county agency within 30 days,
n the annuity issuer’s ongoing obligation to communicate with the county and state agency under federal and state laws when DHS is named a preferred remainder beneficiary.
Steps for Naming DHS the Preferred Remainder Beneficiary
Take the following steps when a person requesting MA payment of LTC services or the person’s spouse is the owner of an annuity and is required to name DHS as a preferred remainder beneficiary.
1. Send the appropriate Annuity Beneficiary Designation form (DHS-5036 or DHS-5036A) to the person requesting MA payment of LTC services for each annuity in which the person or his or her spouse has an ownership interest. Include the Minnesota Health Care Programs Request for Information (DHS-3271) and instruct the person or his or her spouse to:
a. complete the Annuity Owner(s) Information section of the form (DHS-5036 or DHS-5036A),
b. sign and date the form, and
c. return the form within 10 days.
2. If the person does not return the DHS-5036 or 5036A within the processing period:
a. Calculating a Period of Ineligibility for MA Payment of LTC Services.
b. Deny or close eligibility for MA payment of LTC services. Approve or continue eligibility for MA payment of non-LTC services if all other eligibility factors are met.
c. Send DHS-4915, Notice of Action for Payment of Long-Term Care Services. See Notice Requirements for more information.
d. Send DHS-5181, Lead Agency Case Manager/Worker Communication Form, to the lead agency case manager if the person is requesting waiver services (CAC, CADI, DD, TBI, or EW) indicating eligibility for MA payment of LTC services has been denied or closed.
e. Case note all actions.
3. When the person returns the DHS-5036 or DHS-5036A:
a. Complete an Issuer of Annuity Notice of Obligation (DHS-5037):
m Fill in the date, annuity information, and county contact information.
m Set a reminder in MAXIS (DAIL/TIKL) to track the return of the form.
m Retain a copy of the DHS-5037 and DHS-5036 or DHS-5036A in the case file.
b. Send the original DHS-5037 and DHS-5036 or 5036A to the annuity issuer for each annuity.
4. If the annuity issuer does not return the DHS-5037 within 30 days:
a. Contact the annuity issuer to verify if the issuer is in the process of complying with the request or has returned the DHS-5037 to the annuity owner.
b. Send a request to the DHS Special Recovery Unit to pursue the designation of DHS as a preferred remainder beneficiary on behalf of the annuity owners if the issuer does not return the DHS-5037 to the agency or to the owners.
m Include copies of the completed DHS-5036 or DHS-5036A and DHS-5037 sent to the annuity issuer.
m Retain a copy of the forms in the case file.
DHS Special Recovery Unit.
P.O. Box 64995.
St. Paul, MN 55164-0995.
Fax Number: (651) 431-7431.
c. Continue or approve eligibility for MA payment of LTC services.
d. Follow all of the instructions in Step 2 above if notified by DHS Special Recovery Unit that the person failed to cooperate with the issuer in naming DHS as a remainder beneficiary.
e. Case note all actions.
5. When the annuity issuer returns the DHS-5037:
a. Continue or approve eligibility for MA payment of LTC services if all other factors of eligibility are met and the Confirmation/Status of Request section indicates one of the following:
m DHS is named a preferred remainder beneficiary of the annuity as required by law.
m DHS is named a preferred remainder beneficiary of the annuity, as provided by law, after the annuity owner’s spouse who is not living in a medical institution, or after an annuity owner’s children under 18 or disabled children of any age.
m No death benefit is available under the annuity.
m The issuer describes a valid reason why it is not possible to name DHS a preferred remainder beneficiary.
Note: Non-cooperation with the issuer to name DHS a preferred remainder beneficiary of the annuity is not a valid reason for DHS not to be named a preferred remainder beneficiary.
Keep a copy of the returned DHS-5037 in the case file and send a copy to the DHS Special Recovery Unit if the form indicates DHS has been named a preferred remainder beneficiary.
b. Calculating a Period of Ineligibility for MA Payment of LTC Services if the Confirmation/Status of Request section of the DHS-5037 indicates that an annuity owner has not returned the requested information to the issuer or otherwise has not cooperated toward naming DHS a preferred remainder beneficiary. See Notice Requirements.
c. Set a reminder in MAXIS (DAIL/TIKL) for the date indicated by the issuer that the beneficiary change is expected to be complete if the Confirmation/Status of Request section of the DHS-5037 indicates the beneficiary change is in process. Follow the instructions below.
m Call the person listed as completing the DHS-5037 (page 2) if confirmation that DHS has been named a preferred remainder beneficiary is not received by the expected date of completion as indicated by the annuity issuer on the returned DHS-5037.
m Follow the instructions in Steps a and b immediately above, as appropriate, if the annuity issuer provides the information about the annuity within 10 days after calling the person listed as completing the DHS-5037.
m Follow the instructions above to refer the case to the DHS Special Recovery Unit if a response from the person listed as completing the form (or any other representative of the annuity issuer) is not received within 10 days of the follow-up call.
d. Case note all actions.
Calculating a period of ineligibility for MA payment of LTC services
Determine the appropriate value of the annuity to calculate a period of ineligibility based upon the phase of the annuity as follows:
l The value of the annuity is the current cash value (cash surrender value) of the annuity if the annuity is in the accumulation phase.
l The value of the annuity is the total amount of money annuitized if the annuity is in the annuitization (payout) phase.
Use the calculation in Determining Transfer Penalty (MA) to determine the period of time the person is ineligible for MA payment of LTC services due to failure to name DHS a preferred remainder beneficiary.
Change in Annuity Income or Preferred Remainder Beneficiary
Evaluate any information that the annuity issuer or any other source provides that indicates a change in either the amount of income or principal the client or his or her spouse is withdrawing from the annuity since the last request for MA payment of LTC services or that DHS is no longer named as a preferred remainder beneficiary to determine if:
l A penalty period applies.
l An uncompensated transfer has occurred.
l A change in the amount of available income from the annuity has occurred.
The Notice of Action for Payment of Long-Term Care Services (DHS-4915) is a required notice when a client fails to name DHS a preferred remainder beneficiary. This is the official notification of denial or ending of MA payment of LTC services. Neither MAXIS nor MMIS send an automated notice if the person is also eligible for MA for non-LTC services. Send all four pages of the DHS-4915 to the applicant or enrollee following these instructions:
l Send the DHS-4915 to notify the client of denial or ending of MA payment of LTC services. A 10-day advance notice is required before ending MA payment of LTC services.
l Enter a detailed case note of the action taken.
l Do not close eligibility for non-LTC MA services if the client is eligible.
l Determine the end date of the ineligibility period for not naming DHS the preferred remainder beneficiary if the applicant or enrollee is eligible for non-LTC MA services. Set a MAXIS reminder (DAIL/TIKL) for the end date of the ineligibility period to send the client a DHS-3543 if the client continues to reside in a nursing facility and is eligible for MA for non-LTC services.
Refer to the MMIS User Manual section for LTC Services Ineligibility.