Indiana uses the life expectancy tables published by the Office of the Actuary of the Social Security Administration, here.

ANNUITY RULES

According to the December 28, 2012, update from the State of Indiana:

Annuities purchased and transactions made on annuities owned by the applicant/recipient and spouse must name the State as remainder beneficiary in accordance with the rules that follow below. If these rules regarding the beneficiary assignment in the correct position are not met, the full purchase price of the annuity is considered an improper transfer and a penalty must be imposed.

1. An annuity must name the State as the remainder beneficiary in the first position unless there is a community spouse and/or a minor or disabled child.
2. If there is a community spouse and/or minor or disabled child, the State must be named as the remainder beneficiary in the second position after the community spouse or minor or disabled child.
3. If the State has been named as a remainder beneficiary after a community spouse and/or a minor or disable child, and any of those individuals or their representative dispose of any of the remainder of the annuity for less than fair market value, the State must then be named beneficiary in the first position.
4. The requirement is waived if the individual has purchased a long-term care insurance policy that protects the annuity as approved by the Indiana Long-Term Care Partnership (ILTCP).

As remainder beneficiary, the State is entitled to receive the total amount of medical assistance paid on behalf of the applicant for medical assistance.

The rules explained below do not apply to annuities owned by or transactions made by community spouses. There are two separate sets of criteria that, if met by the terms of the annuity, will not result in a transfer penalty. The first set will be referred to as “soundness” criteria. The second set will be referred to as “class exceptions.” The annuity does not have to meet both sets of criteria – it has to meet the criteria from either set.

The purchase of an annuity or transactions completed will not result in a transfer of property penalty if the following conditions, referred to as soundness criteria, are met:

1. The annuity is irrevocable and non-assignable in that it cannot be cashed in nor ownership transferred to another individual or entity; and
2. The annuity is actuarially sound in that it is expected to return full principal and interest within the institutionalized individual’s life expectancy; and
3. the annuity provides payments in approximately equal amounts with no deferred or balloon payments;

Ownership of an annuity in one of the following classes of retirement annuities will not result in a transfer of property penalty:

1. An individual retirement annuity (according to Sec. 408(b)) of the Internal Revenue Code of 1986 (IRC); or
2. A deemed Individual Retirement Account (IRA) under a qualified employer plan (according to Sec. 408(Q) of the IRC); or
3. The annuity is purchased with proceeds from a traditional IRA (IRC Sec. 408a); or
4. The annuity is purchased with proceeds from certain accounts or trusts which are treated as traditional IRAs (IRC Sec. 408(c)); or
5. The annuity is purchased with proceeds from a simplified retirement account (IRC Sec. 408(p));
6. The annuity is purchased with proceeds from simplified employee pension (IRC Sec 408(k));
7. The annuity is purchased with proceeds from a Roth IRA (IRC Sec. 408(A)).

For more information please visit Indiana’s Family and Social Services Administration website.

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