In general, an irrevocable annuity bought in the look-back period, or a revocable annuity that becomes irrevocable in the look-back period may be a transfer of assets for less than full value.
Exception:
Full value is considered to be received when the annuity meets the requirements in the table below:
The annuity must… |
AND meet all conditions below... |
· Name AHCCCS as the primary beneficiary; or · If the owner has a spouse, disabled child or minor child, AHCCCS must be listed as beneficiary in the second position after the spouse, disabled child or minor child. |
· Was created using funds in a ROTH IRA, 408 or other employer sponsored plan; OR · Was purchased from a life insurance company or other commercial company that sells annuities as part of its normal course of business; AND · Provides equal monthly payments with no balloon, deferred or increasing or decreasing monthly payments (small differences due to changes in interest rates are allowed); · The annuitant is the customer or the customer’s spouse; · Is a “Period Certain” annuity that that will return the full principal and interest within the annuitant’s life expectancy as listed in the Period Life Table (from socialsecurity.gov); and · The number of months that annuity payments will be issued should be less than the number of months of the person’s life expectancy (multiply figure from the Period Life Table (from socialsecurity.gov) by 12). |
When the annuity does not meet all requirements above, the value of the annuity on the date it became irrevocable is a transfer with uncompensated value.
See Example Annuities Which are a Compensated Transfer
See Example An Annuity that is an Uncompensated Transfer
Term |
Definition |
Annuitant |
A person entitled to payments from an annuity |
Annuity |
A financial product that in return for premium payments issues periodic payments to the person over a period of time once it is annuitized. |
Annuitized |
An annuity account or fund that has become irrevocable and is issuing payments according to the terms of the annuity contract. |
Beneficiary |
A person entitled to any remaining pay-out of an annuity upon the death of the annuitant. |
Irrevocable annuity |
An annuity issuing payments in accordance with the annuity contract, and cannot be cashed in. Also called an “immediate” annuity. |
Revocable |
An annuity contract that can be surrendered and the funds in the account withdrawn. Also called a “deferred” annuity. |
Proof of contract terms, including length of the contract, payment amounts, annuitant’s name, and beneficiary, may include one or more of the following documents:
· Copies of the annuity contract and account statements from the annuity or insurance company;
· A Request for Verification of Annuity (DE-235) form, completed by the annuity company or life insurance company;
· A copy of the annuity application the customer signed at the time the annuity was purchased; or
NOTE Generally the beneficiary is listed in the annuity application and not in the annuity contract itself.
· Other written statement completed by the annuity company or life insurance company, containing the terms of the contract.
Program |
Legal Authorities |
ALTCS |
42 USC 1396p(c)(1)(F) and (G) AAC R9-28-401 and 409 |