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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 7

provide that the State becomes the remainder beneficiary in the first position if the community spouse, the child, or their representative disposes of any of the remainder of the annuity for less than fair market value.

As a remainder beneficiary, the State may receive the total amount of medical assistance paid for long-term care on the individual’s behalf. The State will notify the issuer of the annuity of the State’s right as the preferred remainder beneficiary. The issuer must notify the State if there are any changes in the amount of income or principal being withdrawn.

Any annuity purchased by an individual or community spouse on or after the individual’s look-back date that is not amended to meet these criteria should be treated as a transfer of assets for less than FMV. If an annuity does not have a death benefit or does not allow someone other than a surviving spouse to be named as a beneficiary, verification from the annuity issuer is required.

iii. Annuity Purchases

The purchase of an annuity on or after February 8, 2006, by or on behalf of an institutionalized individual who has applied for LTSS should be treated as a transfer of assets for less than fair market value, when it occurs on or after the individual’s look-back date, unless the annuity:

1. Is considered either:

b. An individual retirement annuity (Section 408(b) of the Internal Revenue Code of 1986 (IRC)); or c. A deemed Individual Retirement Account (IRA) under a qualified employer plan (Section 408(q) of the IRC).

OR

2. Is purchased with the proceeds from one of the following:

a. A traditional IRA (Section 408(a) of the IRC); b. Certain accounts or trusts which are treated as traditional IRAs (Section 408(c) of the IRC); c. A simple retirement account (Section 408(p) of the IRC); d. A simplified employee pension (Section 408(k) of the IRC); or e. A Roth IRA (Section 408A of the IRC).

OR