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

Medicaid referred to as MO HealthNet.

ANNUITY RULES

According to the Missouri Income Maintenance Manual §1030.030.10 Determining Eligibility for MHABD Vendor or Home and Community Waiver Services for Annuities that were Purchased and Began Making Payments on or after April 20, 2010 When There is a Community Spouse:

Annuities will not be considered as an available resource or subject to a transfer penalty for either the community or institutionalized spouse applying for or receiving MHABD vendor or HCB benefits if the annuity meets all of the following requirements:

• Is owned by the community spouse or institutionalized spouse
• Is irrevocable and non-assignable
• Is actuarially sound as measured against the Period Life table published by the Office of the Chief Actuary of the Social Security Administration based on the life expectancy of the annuitant
• Provides equal or nearly equal payments for the duration of the annuity with no deferral and no balloon payments; and
• Provides for the appropriate beneficiary options. Beneficiary means the person that receives the funds from the annuity after the death of the annuitant.

There are three qualifying beneficiary options:

Option One – for annuities owned by the community spouse:

• The annuity must provide that the institutionalized spouse is the primary beneficiary in the event of the community spouse’s death; and
• The annuity must provide that in the event of the death of the institutionalized spouse the state of Missouri is named as the secondary or contingent beneficiary for the amounts of medical assistance (can also state Medicaid or MO HealthNet) expended by the state of Missouri on the institutionalized spouse’s behalf. The annuity beneficiary designation must contain the following language to insure that the state of Missouri is repaid – “Proceeds of this annuity shall be paid to the State of Missouri for the amount of Medicaid funds expended on behalf of (name of the institutionalized spouse).”

Option Two – for annuities owned by the institutionalized spouse:

• The annuity must provide that the State of Missouri is the primary beneficiary for at least the total amount of medical assistance (can also state Medicaid or MO HealthNet) paid on behalf of the institutionalized individual. The annuity must contain the following language to insure that the state of Missouri is repaid – “Proceeds of this annuity shall be paid to the State of Missouri for the amount of Medicaid funds expended on behalf of (name of the institutionalized spouse)”; or

Option Three – for annuities owned by the institutionalized spouse:

• The annuity must provide that the State of Missouri is named as secondary or contingent beneficiary after the community spouse or minor or disabled child and is named as primary beneficiary if the community spouse, minor or disabled child, or a representative of such child disposes of any remainder for less than fair market value. The annuity beneficiary designation must contain the following language to insure that the State of Missouri is repaid – “Proceeds of this annuity shall be paid to the State of Missouri for the amount of Medicaid funds expended on behalf of (name of the institutionalized spouse).”
• The annuity may be purchased from the institutionalized spouse’s share of assets for the community spouse because there is no transfer penalty between spouses. The community spouse’s annuity income stream cannot be considered an available resource in determining an institutionalized spouse’s eligibility for MHABD vendor or HCB benefits. Annuity payments are included as income to the spouse who receives the payments.

According to the Missouri Income Maintenance Manual §1030.030.10.10 Annuities that were purchased and began making payments on or after August 28, 2007:

The income stream of an annuity from which a primary beneficiary (or annuitant) receives monthly income is EXCLUDED as an available resource, if the annuity:

1. Is actuarially sound as measured against the life expectancy tables published by the Office of the Chief Actuary of the Social Security Administration.
2. Provides equal or nearly equal payments for the duration of the annuity and excludes balloon-style final payments.
3. Names the State of Missouri as the secondary or contingent beneficiary ensuring payment of MO HealthNet expenditures if the individual predeceases the duration of the annuity, AND
4. Names and pays the MO HealthNet participant as the primary beneficiary (or annuitant).

According to the Missouri Income Maintenance Manual §1040.020.35.20 Individual Retirement Annuity (IRA):

Irrevocable life annuities (in which the MHABD vendor or HCB applicant or participant or their spouse is the owner, and the applicant or participant is the annuitant) purchased on or after February 8, 2006 are not considered as an asset transfer of property (disposal of assets for less than fair market value) when:

1. The annuity contract meets the requirement pertaining to the naming of the State as a remainder beneficiary (see § 1030.030.10), and
2. The annuity is considered either:

a. An individual retirement annuity (according to Sec. 408(b)) of the Internal Revenue Code of 1986 (IRC), or
b. 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 one of the following:

a. A traditional Ira (IRC Sec. 408a); or
b. Certain accounts or trusts which are treated as traditional IRAs (IRC Sec. 408 §(c)); or
c. A simplified retirement account (IRC Sec. 408 § (p)); or
d. A simplified employee pension (IRC Sec. 408 § (k)); or
e. A Roth IRA (IRC Sec. 408A).

ANNUITY DECISION

• J.P. et al. v. Missouri State Family Support
• Danna v. Missouri Department of Social Services

For more information please visit the Missouri Department of Social Services website.

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