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Aged, Blind and Disabled Manual Policy Manual Number: 125.015 Section: Institutional Medicaid Chapter: Resource Assessment

January 5, 2026 Division of TennCare 7 The Deficit Reduction Act (DRA) of 2005 requires all states to allocate the maximum amount of available income of the institutionalized spouse to the community spouse before granting an increase in the CSRMA. This is referred to as the “income-first” method.

ii. Procedure TennCare uses the Single Fixed Annuity model to address appeals when there is insufficient income to provide the community spouse with the Maintenance Needs Standard and the couple has additional resources. A single fixed annuity can turn a portion of an individual’s savings in to income payments made for the rest of the individual’s life. The procedure for establishing a single fixed annuity is listed below.

1. Additional resources may be allocated to the community spouse through the administrative appeals process to make up any shortfall between the amount of income allocated from the institutionalized spouse to the community spouse and the Maintenance Needs Standard, if determined appropriate by an administrative judge.

2. The amount of additional resources that are necessary to cover the income shortfall shall be determined in reference to the purchase of a single premium annuity as follows: a. By calculating the shortfall between the amount of income allocated and the Maintenance Needs Standard, and then determining the amount of resources that must be invested in a single premium annuity in order to generate the income necessary to cover the shortfall. b. The amount of resources needed to cover the shortfall shall be determined in reference to an annuity calculator as adopted by TennCare. c. Additional resources may be allocated to the community spouse if the amount of resources needed to cover the shortfall is greater than the CSRMA.

3. The additional resource allocation to the community spouse does not require the actual purchase of a single premium annuity that is used for purposes of calculating the amount of the additional resource allocation.

4. If a single premium annuity is actually purchased pursuant to these rules, the annuity must comply with all other relevant requirements of state and federal law. See Annuities in the Transfer of Assets and Penalty Periods policy.

5. The amount of additional resources that are necessary to cover the shortfall shall not be determined in reference to any investment which contemplates the return of the entire principal at maturity.

Example: Mr. Smith enters a nursing facility in January 2018, requests a resource assessment, and submits an application for Institutional Medicaid. Mrs. Smith lives in the home and is not applying for or receiving Medicaid. Mr. Smith has an approved PAE in