Annuities 510-05-70-45

General Information 510-05-70-45-05

(Revised 5/1/2023 ML 3725)

An annuity is a financial instrument, identified as such, that is established to provide periodic income payments over a defined period of time (see "annuity"). Most annuities are sold by organizations such as insurance companies (see "issuing entity"), though individuals sometimes assume the responsibility to pay annuity contracts. An annuity may be purchased with a single lump sum payment or through periodic payments. Annuities have long been used as a means of creating retirement income, and many established retirement plans involve the use of annuities. Annuities are also used in an attempt to convert countable assets into income so as to avoid consideration of those assets in eligibility determinations.

The following annuity sections describe the effect of any annuity on any application for Medicaid benefits. These sections identify annuities that are not countable assets; annuities that are countable assets, how to establish the value of an annuity; and how to determine if the purchase, annuitization, or change to an annuity is a disqualifying transfer, and if so, how to determine the amount of the disqualifying transfer. These sections take into consideration asset considerations (510-05-70-10), valuation of assets (510-05-70-60), and federal and state (N.D.C.C. 50-24.1-02.8) annuity provisions, which govern transfers and purchases of annuities. These sections recognize the extent to which annuities may be returned to the issuing entity for a cash settlement, transferred to another individual as payee, or have the payee's rights to income sold to another without the permission, or even the knowledge, of the issuing entity.

Annuities may be submitted to the Medicaid Eligibility unit for assistance in determining whether the annuity is countable as an asset or whether a disqualifying transfer occurred. A copy of the entire annuity policy, the date of birth of the annuitant, and verification of the annuity purchase price and, if applicable, date of annuitization must be secured and submitted with the inquiry. A review cover sheet is available on the DHS County Intranet web site under the “Medicaid-Healthy Steps/Hard Cards/Annuity Information” folder for those wishing to submit an annuity to the Medicaid Eligibility Unit. Annuity checklists are also available in that folder for those workers wishing to make the determinations on their own. There is a separate checklist depending on when the annuity was last purchased or changed.