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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 9

course of payments to be made by an annuity or the treatment of the income or principal of an annuity.

Annuity transactions include, but are not limited to:

1. Adding unscheduled contributions to an annuity; 2. Making elective withdrawals from an annuity; 3. Assigning an annuity or payments in whole or in part to another person or entity; 4. Annuitizing the contract; 5. Changing the beneficiary of an annuity, in such a way that the annuity no longer names the state in the proper position; and 6. Changing the annuitant or distribution from an annuity, in such a way that the annuity no longer pays out the full value of the annuity to the applicant in equal amounts during the applicant’s lifetime.

Example: Mr. Greenfield discloses at application that he has assigned annuity payments to an irrevocable trust, from which no payments can be made to or for his own benefit. Since the transaction occurred on or after the look-back date and the transfer is not exempt under transfer of assets rules, the annuity transaction is a transfer of assets for less than FMV.

Annuity transactions made by a community spouse prior to the establishment of Institutional Medicaid eligibility may also be evaluated as improper transfers. Routine changes (e.g., change of address, notification of the death or divorce of a remainder beneficiary) and changes beyond the individual’s control are not considered transfers of assets for less than FMV.

v. Annuity is a Transfer of Assets for Less than FMV If an annuity purchase or transaction is determined to be an uncompensated transfer of assets, a penalty period will be applied. The amount used to calculate the penalty period is the full purchase price of the annuity, with two exceptions. When an annuity is determined to not be actuarially sound, the penalty period is determined using the difference between the cash value of the annuity on the date it was annuitized and the amount the annuity is expected to pay out during the individual’s lifetime. If an annuity transaction is determined to be a transfer of assets for less than FMV, the penalty period is determined using the difference between the transaction amount and any compensation received.

i. Excluded Resources Requiring Transfer Information Transfers of the following excluded resources must be evaluated in order to determine that adequate compensation was received. The initial exclusion of these resources was based on their intended use, and a transfer may void the exclusion: