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24 TITLE 16 HEALTH AND SAFETY DELAWARE ADMINISTRATIVE CODE 20330.10.E State Named Remainder Beneficiary in All Annuities Purchased on or after February 8, 2006 1. The State of Delaware must be named as a beneficiary in the correct position. The State must be named beneficiary in the first position for the total amount of medical assistance paid on behalf or the institutionalized spouse, unless there is a community spouse, minor child, or disabled child who resides in the applicant’s home. In such a case, the State must be named in a secondary or remainder position. 2. If the State is not named as a remainder beneficiary the purchase of the annuity will be considered a transfer for less than fair market value. 3. The full purchase value of the annuity will be considered the amount transferred. 20330.10.F Purchase of an Annuity is Considered a Transfer of Assets 1. The transfer of assets provisions should be applied to all annuities purchased on or after February 8, 2006 unless: A. The annuity is considered either: An individual retirement annuity (according to Sec. 408 (b) of the Internal Revenue Code of 1986); or A deemed Individual Retirement Account under a qualified employer plan (according to Sec. 408 (q) of the Internal Revenue Code of 1986). OR B. The annuity is purchased with proceeds from one of the following: A traditional IRA (IRC Sec. 408a); or Certain accounts or trusts which are treated as traditional IRAs (IRC Sec. 408 §(c)); or A simplified retirement account (IRC Sec. 408 §(p)); or A simplified employee pension (IRC Sec. 408 §(k)); or A Roth IRA (IRC Sec. 408A). OR C. The annuity meets all of the following requirements: The annuity is irrevocable and non-assignable; and The annuity is actuarially sound; and The annuity provides payments in approximately equal amounts, with no deferred or balloon payments. 11 DE Reg. 676 (11/01/07) 20340 Life Insurance and Burial Resource Computation 20340.1 Life Insurance 20340.1.1 Life Insurance Terminology 20340.1.2 Life Insurance as a Resource 20340.1.3 Relation to Burial Allowance 20340.1.1 Life Insurance Terminology Insured is the individual whose life is covered by the policy. Beneficiary is the individual who receives the proceeds upon the insured's death. Owner is the individual who is designated as the owner on the policy or by the insurance company. Face Value (FV) is the amount of basic death benefit contracted for at the time the policy is purchased. Cash Surrender Value (CSV) is a form of equity value that is acquired over time. The owner of a policy can obtain its CSV only by turning the policy in for cancellation before it matures or the insured dies. A loan against a policy reduces its CSV. Dividends are shares of company earnings paid to the policy owner. The dividends are not income but the interest on dividends is income. Dividend Additions are amounts of insurance purchased with dividends and added to the policy, increasing its death benefit and CSV. The table of CSV's that comes with a policy does not reflect the added CSV of any dividend additions. Dividend Accumulations are dividends that the policy owner has constructively received but left in the hands of the insurance company to accumulate at interest, like money in a bank account. They are not a value of the policy; the owner can obtain them at any time without affecting the policy's FV or CSV. Dividend accumulations cannot be excluded from resources under the life insurance exclusion, even if the policy that pays the accumulations is excluded from resources. Dividend accumulations are a separate resource (they are not considered as an increase in CSV) and must be designated as burial funds separate from the life insurance policy itself. Unless they can be designated and excluded as burial funds, they are a countable resource.