Annuities established on or after April 1, 2009
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Annuities established on or after April 1, 2009

Revised April 25, 2013

Purpose: This section is an overview of changes dealing with annuities established on or after April 1, 2009 per WAC 182-516-0201

Use WAC 182-516-0200 for annuities established before April 1, 2009.

What has changed with annuities established on or after April 1, 2009?

  • Unless specifically unavailable, most annuities will be counted as available resources
  • Most annuities are saleable therefore transfer penalties will be rare
  • Some types of retirement annuities or annuities created from retirement accounts or trusts are unavailable (section 408 and 408A Internal Revenue Code)
  • Tightens pay out periods to a minimum of 5 years up to the actuarial life expectancy OR the actual life expectancy if less than 5 years
  • To be unavailable requires specific beneficiary designations so Washington State can recover from the annuity.  This includes the community spouse.

Unavailable Irrevocable Annuities

  • Is immediate and non-assignable
  • Pays out in equal monthly payments
    • No deferrals
    • No balloon payments
  • Payout must be:
    • Equal to the actuarial life expectancy of the annuitant, or
    • Not less than 5 years if life expectancy is at least 5 years, or
    • If life expectancy is less than 5 years, then not less than the annuitant's life expectancy
  • Is issued by an individual or insurer licensed to do business in the jurisdiction where it is established
  • Meets the beneficiary designation rules
  • Pay outs are considered unearned income to the annuitant
  • If spouse's are joint annuitants, then split the payment equally between the spouses

Beneficiary Designation

Annuitant is:

  • The applicant/recipient of Medicaid,  or
  • The community spouse of a long-term care (LTC) applicant/recipient

Annuity must name Washington State as:

  • The first beneficiary, or
  • The second beneficiary if one of the following is named as the first:
    • Community spouse
    • Minor child
    • Disabled child (SSA criteria)

Beneficiary Designation

  • If the community spouse or minor/disabled child is the first beneficiary
  • And they transfer their right as the beneficiary to receive payment for less than fair market value
  • Then Washington State must be named the first beneficiary
  • If Washington is not named as first beneficiary, then the annuity becomes an available resource the first of the following month

Pays out Beyond Life Expectancy

  • Annuity is an available resource
  • Do not establish a penalty for the amount to be paid out beyond the annuitant's life expectancy

Retirement Annuities- Section 408 and 408A Internal Revenue Code

  • Individual Retirement Annuities
  • Deemed IRAs under qualified employer plans
  • Purchased with proceeds from:
    • An individual retirement account (IRA)
    • An employer or employee association retirement trusts
    • A simple retirement account
    • A simplified employee pension account or trust
    • A Roth IRA

If retirement annuities section 408 & 408A IRS code include the specific annuity beneficiary designations:

  • Not available resources
  • No transfer penalty

If retirement annuities section 408 & 408A IRS code do not have the specific annuity beneficiary designation then it is an available resource.  Do not establish a transfer penalty.

Title 26, Subsections 408 and 408A of the Internal Revenue Code

Modification Date: April 25, 2013