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Chapter: 1600 Assets Program: MSSI, SFP 45

has occurred. If the individual cannot expect to receive a fair return in their lifetime, the establishment of the account must be regarded as a transfer of assets or income.

To determine if an annuity is actuarially sound use the following instructions: If the average number of years of expected life remaining for the individual equal or exceed the life of the annuity (or other retirement fund), fair compensation is received. If the individual is not expected to live at least as long as the guarantee period of the annuity, then the individual may not have received fair market value for the annuity. In this case, a transfer of assets for less than fair market value may have taken place, subjecting the individual to a period of ineligibility.

The penalty must be based on the uncompensated value of the transfer of assets that is considered to have occurred at the time the annuity (or other retirement fund) was purchased.

Example 1: Mr. Jones (age 65) purchases an annuity to be paid over the course of 10 years. According to the life expectancy tables, his life expectancy is 16.15 years. The annuity is considered actuarially sound and there is no uncompensated value.

Example 2: Mr. Smith (age 80) purchases the same annuity, also to be paid over 10 years. His life expectancy is only 8.94. Since Mr. Smith's life expectancy is less than the payout of the annuity, the annuity is not actuarially sound and he did not receive fair compensation.

To determine if the individual will receive a fair market return in his lifetime on an annuity or other retirement fund, use the life expectancy tables in Appendix A-14, and the following instructions:

Step 1: Calculate the compensation the individual is expected to receive in his lifetime by computing the individual's annual income from the annuity and multiplying by the individual's life expectancy. Use the life expectancy factor corresponding to the individual's age at the time the annuity (or retirement fund) was purchased (i.e., the time of the transfer). (If a couple is involved, use the life expectancy factor for the spouse who is receiving the retirement payments.)

Step 2: Determine the uncompensated value by subtracting the compensation the individual expects to receive in his lifetime from the annuity (the result of step 1) from the total amount put into the annuity. The result is the uncompensated portion of the annuity (or other retirement fund) which the individual cannot reasonably expect to receive in his lifetime.

Step 3: If there is no uncompensated value, the annuity is actuarially sound and no transfer of assets penalty applies. If there is uncompensated value, proceed by following all standard transfer of asset procedures, including the opportunity to rebut the reason for the transfer. 1640.0609.03 Transfers to Annuities on or After 11/1/07 (MSSI) This policy applies to ICP, institutionalized MEDS-AD, institutionalized Hospice, HCBS Programs and PACE.

Applicant’s or Recipient’s Annuity

The purchase of an annuity on or after 11/01/2007, and within the look-back period, by an individual (or his representative) will be considered a transfer of assets for less than fair compensation unless the annuity meets all of the following requirements:

1. Names the state of Florida, Agency for Health Care Administration (AHCA), as the primary beneficiary, for the total amount of medical assistance paid on behalf of the individual, except for when the individual has a spouse or minor or disabled adult child. In this case, the state shall be named as secondary beneficiary after the spouse and/or the minor or disabled child.