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

ANNUITY RULES

According to the Ohio Department of Medicaid Eligibility Manual, section 5160:1-3-04.2 entitled Medicaid: The Disclosure and Treatment of Annuities for Recipients or Applicants for Medical Assistance Programs:

1. For any annuity purchased or annuity transaction complete on or after February 8, 2006, the purchase or transaction must be treated as the disposal of an asset for less than fair market value unless:

a. The state of Ohio is named as the remainder beneficiary in the first position for the total amount of medical assistance furnished to the individual; or
b. The state of Ohio is named as such a beneficiary in the second position for the total amount of medical assistance furnished to the individual after the community spouse or minor or disabled child, and is named in the first position for the total amount of medical assistance furnished to the individual if such spouse or a representative of such child disposes of any such remainder for less than fair market value.

2. The following annuity purchases are not considered a disposal of an asset for less than fair market value for any annuity purchased on or after February 8, 2006:

a. An annuity described in subsection (b) or (q) of section 408 of the Internal Revenue Code of 1986 as in effect on August 31, 2005; or
b. An annuity purchased with proceeds from:

i. An account or trust described in subsection (a), (c), or (p) of section 408 of such code,
ii. A simplified employee pension; or
iii. A Roth IRA described in section 408A of such code; or

3. For any annuity purchased on or after February 8, 2006, the purchased annuity must be irrevocable, non-assignable, and actuarially sound as determined by the life expectancy tables published by the office of the actuary of the social security administration and provides for payments in equal amounts during the term of the annuity with no deferral and no balloon payments made.

a. The purchased annuity must not have a balloon payment provision unless the balloon payment designation is for the community spouse. The value of the balloon payment is considered an improper transfer unless rebutted by the applicant/recipient. To rebut the presumption, the applicant must produce clear and convincing medical evidence that the annuitant is expected to actually live past the date of the balloon payment.

COMMUNITY SPOUSE PLANNING

October 2013 Update: U.S. Court of Appeals for the Sixth Circuit has reversed a judgment in an Ohio married couple case on the treatment of a Medicaid Compliant Annuity purchased by a community spouse.  See Hughes v. McCarthy below.

Ohio Administrative Code 5101:1-39-07(G) states the following:

(G) Any transfer between spouses in order to comply with the Medicaid community spouse resource allowance (CSRA) computed pursuant to Chapter 5101:1-39 and Chapter 5101:6-7 of the Administrative Code may not be applied inconsistently with the rules setting limits on the CSRA or the minimum monthly maintenance needs allowance (MMMNA).

(1) Any amount of a couple’s resources exceeding the CSRA must be used for the benefit of the institutionalized spouse and/or community spouse.
(2) Any amount of a couple’s resources exceeding the CSRA may not be transferred to the community spouse or to another for the sole benefit of the community spouse unless permitted in a hearing decision issued under Chapter 5101:6-7 of the Administrative Code.
(3) Any amount of a couple’s resources exceeding the CSRA may not be converted to another form for the purpose of generating additional income for the community spouse unless permitted in a hearing decision issued under Chapter 5101:6-7 of the Administrative Code.
(4) Transfers in excess allowed by this rule, must be presumed an improper transfer.

Additionally, an Ohio Department of Medicaid Bureau of State Hearings Administrative Appeal Decision (from Wood County Department of Medicaid), which was made on December 23rd, 2008, states the following:
“If the income from the annuity does not exceed the amount of the community spouse’s monthly income allowance, then the purchase of the annuity would not be considered an improper transfer and there will be no restricted Medicaid period. This is consistent with Ohio Administrative Code 5101:1-39-07(G).”

ANNUITY DECISIONS

• Vieth v. Ohio Dept. of Job and Family Services
• Rorick v. Ohio Dept. of Job and Family Services
• Hughes v. McCarthy
• Koenig v. Colbert
• Koenig v. Dungey

PROMISSORY NOTE DECISION

• Montgomery v. Ohio Department of Job and Family Services

For more information on the rules visit the Ohio Administrative Code section covering Medicaid General Principles

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