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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 8

3. Meets all of the following requirements:

a. Is irrevocable; b. Is non-assignable; c. Is actuarially sound; and d. Provides for payments in equal amounts during the term of the annuity, with no deferral or balloon payments.

Note: The above criteria should not be applied to annuities that are purchased with the applicant’s or couple’s assets that are held by the community spouse, annuities that are purchased entirely with the assets of someone other than the applicant or spouse, and annuities that are determined to be available to the applicant as a resource (see the ABD Countable and Excluded Resources policy).

4. Determining Whether an Annuity is Actuarially Sound

An annuity is actuarially sound when the expected return on the annuity will be paid within the actual or expected lifetime of the annuitant.

To determine whether an annuity is actuarially sound, multiply the annual amount scheduled to be paid out by the period of the annuity. If the period of the annuity is based on the annuitant’s lifetime, the annual payments are multiplied by the individual’s life expectancy at the time of annuitization, see SSA Period Life Table. If the annuity is a period certain annuity, annual payments are multiplied by the annuitant’s life expectancy or the period certain, whichever is less. The calculated amount is the amount the annuity is expected to pay out during the individual’s lifetime. If this amount is equal to or greater than the cash value of the annuity on the date it was annuitized, the annuity is actuarially sound.

When the cash value of the annuity on the date it was annuitized is greater than the amount that is expected to be paid out during the individual’s lifetime, the difference between the two is an uncompensated transfer of assets.

iv. Annuity Transactions

Since annuities owned by an applicant must be considered in determining the state’s obligation towards the cost of long-term care and/or the applicant’s eligibility for TennCare Medicaid, certain annuity transactions made on or after February 8, 2006, by an applicant, or by someone acting on his behalf, on or after the look-back date, can be considered asset transfers made for less than FMV. Transactions include any action taken that changes the