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

ANNUITY RULES

According to the Medicaid Eligibility Handbook, Release 15-02, § 17.11 entitled: Annuities:

17.11.1 Treatment of Revocable Annuities

The following policy applies to both an annuity purchased by a member and an annuity purchased by a community spouse.

1. Determining Resource Value

a. When the annuity is revocable and the funds deposited can be withdrawn, the value of the annuity principal, plus accumulated interest, is a countable resource.

b. When an annuity company will apply a financial penalty for early withdrawal of the funds in an annuity account, the amount that the member would receive upon full surrender of the annuity contract is the counted resource value of the annuity.

2. Treatment of Withdrawals and Interest

a. When a member makes withdrawals from the principal or accumulated interest on an annuity account, the withdrawals are a conversion of a resource

b. Interest accruing on an annuity account that is paid to the annuitant as it is earned is excluded income.

c. Interest earned on a revocable annuity that is left in the account to accumulate is not considered income but instead is considered as an increase in the resource value of the annuity account.

17.11.2 Evaluating Irrevocable Annuities for Divestment

17.11.2.1 Irrevocable Annuities that are not considered divestment:

a. Names “Wisconsin Department of Health Services Estate Recovery Program” (hereafter referred to as “the State”) as the remainder Beneficiary if purchased or created on or after January 1, 2009. In those cases where there is a spouse, disabled child or minor child, the State is beneficiary in the second position;

AND

b. Is created from funds in a ROTH IRA , 408 IRA or other employer sponsored plan; or is purchased from a life insurance company or other commercial company that sells annuities as part of its normal course of business;

c. Is considered an individual retirement annuity (according to Sec. 408(b)) of the Internal Revenue Code of 1986 (IRC), or a deemed Individual Retirement Account (IRA) under a qualified employer plan (according to Sec. 408(q) of the IRC);

d. Provides substantially equal monthly payments with no balloon, deferred or graduated payments (variations in payment amounts due to changes in interest rates are allowed);

e. Is Annuitized for the individual or spouse (currently issuing payments);

f. Is a period-certain annuity that will return the full principal and interest within the annuitant’s life expectancy as listed in the Period Life Table (from socialsecurity.gov).

g. The number of months that annuity payments will be issued should be less than the number of months of the individual’s life expectancy (multiply figure from the Period Life Table (from socialsecurity.gov) by 12).

Note:  Annuities that provide for indefinite “lifetime payments” will not return the full principal and interest within the member’s life expectancy.

 

COMMUNITY SPOUSE PLANNING

Beginning November 11, 2013, transfers made by the community spouse on or after September 18, 2013, of non-exempt property for less than fair market value (FMV), within the first five years after the institutionalized spouse is determined to be eligible, will result in a divestment penalty period for the institutionalized spouse.  If the institutionalized spouse loses Medicaid eligibility, reapplies and is found eligible, a new five-year period starts.  (Wis. Stat. 49.455(5)(d)).

Beginning with applications dated November 11, 2013, or later, financial information and signatures are required from both the spouse applying for LTC, or Institutional Medicaid and his or her community spouse.  Eligibility will be denied for an individual whose community spouse refuses to sign the application, refuses to disclose the value of assets, or refuses to provide required information on income or resources.  This means that “Just say no” is no longer a viable strategy for shielding assets.  (Wis. Stat. 49.455(5)(e)).

Pursuant to Wis. Stat. 49.455(8)(d)2, and beginning with applications dated November 11, 2013, or later, DHS must base the amount of resources to be transferred to the community spouse to raise his or her income to the level of the minimum monthly maintenance needs allowance on the cost of a single premium lifetime annuity that pays monthly amounts that combined with other available income, raise the community spouse’s income to the minimum monthly maintenance needs allowance.  The community spouse, however, is not required to actually purchase the annuity to receive the amount.  IM workers do not make this determination.  The decision to allow a community spouse to keep a greater amount of assets is done through the Fair Hearing Process or through a court decision.

PARTIAL CURES

Beginning with penalty periods with a start date of November 11, 2013, or later, the total value of the divested amount must be returned in order to ‘cure’ the divestment.  A penalty period will no longer be recalculated based on a partial repayment. (Wis. Stat. 49.453(8)(a)).

LIFE INSURANCE CASH VALUE EXEMPTION

Beginning with applications dated November 11, 2013, or later, the face value of riders and other attachments are included in the total ‘face value’ of the policy.  If the total face value of all life insurance policies, including riders and other attachments, is more than $1,500, count the cash value of the policy as an available asset. (Wis. Stat. 49.47(4)(b)(2w).

ANNUITY DECISIONS

IRA Annuity Decision

J.G. Wentworth decision

PREPAID FUNERAL DECISION

Schmitz v. Department of Health Services

Visit Wisconsin’s online Medicaid Eligibility Handbook to learn more.  Wisconsin’s Operations Memo 09-01 regarding Divestment and Other Medicaid Asset Policy Changes Required Under the Deficit Reduction Act of 2005 can be found here.

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