Section 405IAC2-3-1.2. Transfers involving annuities

  2. (a) For purposes of section, "annuity" means a policy, certificate, contract, or other arrangement between two (2) or more parties whereby one (1) party pays a lump sum of money or other valuable consideration to the other party in return for the right to receive payments in the future and shall include any similar financial instrument, as may be specified by the Secretary of Health and Human Services. An annuity not purchased from an entity described in subsection (b) of this section will be considered a transfer for inadequate consideration.

  (b) The purchase of an annuity, any instrument purporting to be an annuity, or any other arrangement that meets the definition of an annuity in subsection (a) shall be considered an uncompensated transfer of assets resulting in a penalty under section 1.1 of this rule unless the annuity is purchased from one (1) of the following:

(1) An insurance company or another commercial company that sells annuities as part of the normal course of business.

(2) A nonprofit organization qualified under Section 501(c) of the Internal Revenue Code as amended.

  (c) An annuity described in subsection (a) of this section is not an asset for purposes of section 1.1 of this rule if:

(1) the annuity is:

(A) an annuity described in subsection (b) or (q) of Section 408 of the Internal Revenue Code of 1986, as amended; or

(B) purchased with proceeds from an account or trust described in subsection (a), (c), or (p) of Section 408 of such Code, a simplified employee pension within the meaning of Section 408 of the Code, or a Roth IRA described in Section 408(A) of such Code; or

(2) the annuity:

(A) is irrevocable and nonassignable;

(B) is actuarially sound; and

(C) provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made.

  (d) An annuity shall be treated as a transfer of property for less than fair market value under section 1.1 of this rule unless:

(1) the state is named as the remainder beneficiary in the first position for at least the total amount of medical assistance paid on the behalf of the applicant for medical assistance;

(2) the state is named as such a beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or a representative of such child disposes of any such remainder for less than fair market value; or

(3) the individual purchased a long-term care insurance policy that protects the annuity.

(Office of the Secretary of Family and Social Services; 405 IAC 2-3-1.2; filed May 1, 2002, 10:38 a.m.: 25 IR 2726; errata filed Aug 22, 2002, 3:12 p.m.: 26 IR 35; readopted filed Sep 19, 2007, 12:16 p.m.: 20071010-IR-405070311RFA; filed Aug 18, 2009, 11:33 a.m.: 20090916-IR-405080325FRA; readopted filed Oct 28, 2013, 3:18 p.m.: 20131127-IR-405130241RFA)