Annuities as income

Official source

The stream of payments from an annuity is unearned income when the annuity is not an available resource. If the annuity is an available resource, the stream of payments is not income, but a conversion of a resource into cash.

Example #1

Steve is applying for COPES. On April 25th, Steve’s spouse, Joan, purchased an annuity with $100,000 (Joan is the annuitant). Joan can cancel the contract with 15 days of purchase. As of May 1st, all the couple’s other resources total $5,000. The couple’s resources as of May 1st is $105,000 because Joan can cancel the contract and get the $100,000 returned.

Example #2

Same example as above, except the annuity was purchased on April 5th and the annuity can be used as collateral for a loan (can be assigned). The couple’s resources as of May 1st is $105,000 because Joan can use the annuity to obtain approximately the same value of the annuity as cash.

Example #3

Same example as above, except the annuity was determined to not be a resource. The annuity pays out $1,200 per month. That $1,200 is unearned income for Joan.

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Annuities as income

Official source

The stream of payments from an annuity is unearned income when the annuity is not an available resource. If the annuity is an available resource, the stream of payments is not income, but a conversion of a resource into cash.

Example #1

Steve is applying for COPES. On April 25th, Steve’s spouse, Joan, purchased an annuity with $100,000 (Joan is the annuitant). Joan can cancel the contract with 15 days of purchase. As of May 1st, all the couple’s other resources total $5,000. The couple’s resources as of May 1st is $105,000 because Joan can cancel the contract and get the $100,000 returned.

Example #2

Same example as above, except the annuity was purchased on April 5th and the annuity can be used as collateral for a loan (can be assigned). The couple’s resources as of May 1st is $105,000 because Joan can use the annuity to obtain approximately the same value of the annuity as cash.

Example #3

Same example as above, except the annuity was determined to not be a resource. The annuity pays out $1,200 per month. That $1,200 is unearned income for Joan.