Statutes, codes, and regulations
Rhode Island Administrative Code
Title 210 - Executive Office of Health and Human ServicesChapter 50 - Medicaid Long-Term Services and SupportsSubchapter 00 - Long-Term Services
Part 6 - Medicaid Long-Term Services and Supports: Financial Eligibility
Section 210-RICR-50-00-6.7 - Asset Transfers Involving Annuities

210 R.I. Code R. 210-RICR-50-00-6.7

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Current through December 3, 2024
Section 210-RICR-50-00-6.7 - Asset Transfers Involving Annuities
A. An annuity is a contract reflecting payment to an insurance company, bank, charitable organization, or other registered or licensed entity; it may also be a private contract between two (2) parties. This section provides the criteria for determining whether annuity is treated as disqualifying transfer resulting in a period of ineligibility for Medicaid LTSS. Irrespective of whether the establishment of the annuity is considered a disqualifying transfer, the provisions pertaining to whether any income derived is counted or excluded for eligibility purposes is located in §40-00-3.5 .5(A)(2)(a) of this Title are applied.
B. Annuities established pre-DRA- Before February 8, 2006:
1. Disqualifying transfer - The annuity was purchased before February 8, 2006, and the expected return on the annuity is not commensurate with a reasonable estimate of life expectancy, also referred to as "actuarially sound."
2. Allowed transfer - When an annuity purchased before February 8, 2006, is "actuarially sound," then it is not considered a transfer of assets for less than fair market value. The annuitant has just converted the resources to income.
C. To determine whether the annuity is "actuarially sound," the State uses the life expectancy tables compiled from information published by the Office of the Chief Actuary of the Social Security Administration. These tables may be accessed at http://www.ssa.gov/OACT/STATS/table4c6.html.
D. The average number of years of expected life remaining for the annuitant must coincide with the life of the annuity. If the annuitant is not reasonably expected to live as long as or longer than the guarantee period of the annuity, the annuitant will not receive fair market value for the annuity based on the projected return. In that case, the annuity is not actuarially sound and a disqualifying transfer has occurred. The penalty is assessed based on the disqualifying transfer at the time the annuity was purchased or the date the annuity became available as a countable resource, whichever is later.
E. Post-DRA - Annuities established on or after February 8, 2006.
1. Disqualifying transfer - Purchase of a Medicaid non-compliant annuity on or after February 8, 2006, by an LTSS applicant or beneficiary as the annuitant. An annuity is considered non-compliant if purchased at less than FMV or has no readily ascertainable FMV;
2. Allowed transfer - Purchase of a Medicaid compliant annuity. A Medicaid compliant annuity must meet one (1) of the first two (2) conditions and the third (3rd) condition described below when purchased for the applicant or beneficiary:
a. The annuity is an annuity described in subsection (b) or (q) of §408 of the United States Internal Revenue Code of 1986 (26 U.S.C. § 408); or
b. The annuity is purchased with proceeds from:
(1) An account or trust described in §408(a), (c), or (p) of of the United States Internal Revenue Code of 1986 (26 U.S.C. § 408); or
(2) A simplified employee pension (within the meaning of §408(k) of the United States Internal Revenue Code of 1986) (26 U.S.C. § 408); or
(3) A Roth IRA described in §408A of the United States Internal Revenue Code of 1986 (26 U.S.C. § 408); and
c. The annuity must be:
(1) Irrevocable and non-assignable;
(2) Actuarially sound, as determined in accordance with actuarial publications of the Office of the Chief Actuary of the United States Social Security Administration; and provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made; and
(3) Have the State of Rhode Island named as the remainder beneficiary for at least the total amount of Medicaid paid on behalf of the annuitant or the annuitant's spouse, if either is currently receiving Medicaid LTSS. Rhode Island may be named as either:
(AA) The remainder beneficiary in the first (1st) position, or
(BB) The remainder beneficiary in the second (2nd) position, after the community spouse, minor child or disabled child, and in the first (1st) position if the spouse or a representative of the child does not dispose of the remainder for less than fair market value.
F. Annuities purchased by a non-LTSS spouse:
1. Disqualifying transfer - Purchase of an annuity on or after February 8, 2006, by the non-LTSS spouse of a Medicaid LTSS applicant or beneficiary in which the spouse is the annuitant.
2. Allowed transfer - The annuity has the State of Rhode Island named as the remainder beneficiary for at least the total amount of Medicaid paid on behalf of the annuitant or the annuitant's spouse, if either is currently receiving Medicaid LTSS. The State may be named as either:
a. The remainder beneficiary in the first (1st) position; or
b. The remainder beneficiary in the second (2nd) position, after the community spouse, minor child or disabled child, and in the first (1st) position if the spouse or a representative of the child does not dispose of the remainder for less than fair market value.

210 R.I. Code R. 210-RICR-50-00-6.7

Adopted effective 1/20/2019
Amended effective 7/21/2021