7 AAC 100.514 - Annuities

(a) For purposes of determining whether to impose, under 7 AAC 100.510, a transfer-of-asset penalty, the department will consider the purchase of an annuity to be a transfer of an asset for less than fair market value unless the annuity
(1) is an annuity described in 26 U.S.C. 408(b) or (q);
(2) is irrevocable and nonassignable;
(3) is actuarially sound in accordance with (b) of this section;
(4) provides for equal monthly payments during the term of the annuity, with no deferral or balloon payments;
(5) is purchased commercially;
(6) names the Medicaid recipient as the primary beneficiary, or the recipient's spouse if part of a transfer under 7 AAC 100.506; and
(7) names the state as remainder beneficiary
(A) in the first position for at least the total amount of medical assistance paid by the department on behalf of the annuitant; or
(B) in the second position, after the recipient's community spouse, minor child, or disabled child named in the first position, if the community spouse or child disposes of any remainder for less than fair market value.
(b) If the amount that is expected to be paid out during a beneficiary's lifetime is equal to or greater than the purchase price of the annuity, the annuity is actuarially sound for the purpose of (a)(3) of this section. The department will determine whether an annuity is actuarially sound by
(1) computing the number of years the beneficiary is expected to live based on the beneficiary's sex and age at the time the annuity is purchased, using the United States Social Security Administration, Office of the Chief Actuary's Period Life Table 2002, revised as of June 27, 2006, and adopted by reference;
(2) multiplying the beneficiary's life expectancy by the annual amount the annuity is scheduled to pay out and rounding the product down to the nearest dollar; the resulting figure is the amount that the annuity is expected to pay out over the life of the beneficiary; and
(3) comparing the amount determined under (2) of this subsection to the purchase price of the annuity.


7 AAC 100.514
Eff. 7/20/2007, Register 183

The Period Life Table, 2002, adopted by reference in 7 AAC 100.514(b) is available on the Internet at http://www.ssa.gov/OACT/STATS/table4c60.html.

Authority:AS 47.05.010

AS 47.07.020

AS 47.07.040

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