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Aged, Blind and Disabled Manual Policy Manual Number: 125.010 Section: Institutional Medicaid Chapter: Transfer of Assets and Penalty Periods

January 5, 2026 Division of TennCare 6

3. The owner’s adult child who is blind or disabled according to 42 USC 1382c; 4. A sibling of the owner who has equity interest in and has resided in the home for at least one year prior to the individual’s institutionalization; or 5. A child of the owner, regardless of age, who: a. Resided with the individual for two years immediately prior to the individual’s nursing home admission; and b. Provided care which permitted the individual to reside at home.

vi. The asset was transferred exclusively for a purpose other than qualifying for TennCare Medicaid, such as satisfaction of legally enforceable debts.

Note: The timing of payment of debts should be considered. For example, if a family member suddenly remembers or decides to collect on an alleged debt that has purportedly been outstanding for years, and no convincing evidence exists that either the individual affirmatively acknowledged the debt or worked toward satisfying the debt and the individual to whom the debt was owed made previous efforts to collect the debt, the validity of the debt and whether it is legally enforceable may be questionable.

h. Annuities i. Overview

Although usually purchased in order to establish a source of income for retirement, annuities may be used to shelter assets so that the individual purchasing them may become eligible for Medicaid. The DRA of 2005 added new requirements with respect to the disclosure and treatment of annuities for Medicaid. Individuals applying for long-term services and supports must:

1. Disclose any interest the individual or spouse has in an annuity (see the ABD Countable and Excluded Resources policy); 2. Name the State of Tennessee as a remainder beneficiary under any annuity purchased on or after February 8, 2006; and 3. Demonstrate that the purchase of any annuity and any annuity-related transaction made by the individual or spouse on or after February 8, 2006, was not a transfer of assets for less than fair market value.

ii. Requirement to Name the State as a Remainder Beneficiary

LTSS applicants and spouses must designate the State of Tennessee as the primary beneficiary of any death benefit payable under any annuity purchased on or after February 8, 2006. If the individual has a community spouse, or a minor or disabled child, the State may be named in the second position following one of these individuals. If the State is named in the second position following a community spouse or child, the annuity must also