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For irrevocable annuities that do not meet the above criteria, the divested amount is the full purchase price of the annuity. Example 11 Rashon applies for HBCW. He had invested in a Roth IRA while he was working. He converted the IRA to an irrevocable annuity when he retired six months ago and named the Wisconsin Department of Health Services Estate Recovery Program as the beneficiary. Since the annuity meets the conditions in 17.2.6.14 IRREVOCABLE ANNUITIES, the purchase of the annuity is an allowed divestment.

Example 12 Bowen applied for institutional Medicaid on July 28. On July 18, his community spouse Yun used $126,500 of the couple’s resources to purchase an irrevocable nine-year period certain immediate annuity from the XYZ Life Insurance Company. Yun is the annuitant. Yun was 74 years old on the date the annuity was purchased and had a life expectancy of 9.75 years (117 months). The annuity will issue regular monthly checks of $1,488.75 for a set period of nine years or 108 total months. The insurance company will pay out a total of $160,785 over the period of the annuity contract. The contract date of the annuity was July 18 and the first monthly payment was issued on August 18. The annuity names the Wisconsin Department of Health Services Estate Recovery Program as the beneficiary, was purchased from a life insurance company, will issue regular monthly payments, is currently issuing payments and will provide for full return of principal and interest during the community spouse’s life expectancy. Therefore, since the annuity meets the conditions in 17.2.6.14 IRREVOCABLE ANNUITIES, the purchase of the annuity is an allowed divestment. 17.2.6.15 Promissory Notes, Loans, Land Contracts, and Mortgages The purchase of a promissory note, loan, land contract, or mortgage purchased during the look back period or after eligibility is established is an allowed divestment when the terms meet all of the following criteria: 1. Actuarially Sound The repayment term must be within the lender’s life expectancy as determined by the Office of the Chief Actuary of the Social Security Administration, found at the following link: https://www.ssa.gov/OACT/STATS/table4c6.html The date the promissory note, loan, land contract, or mortgage purchased during the look back period or after eligibility is established was signed is used to calculate the lender’s life expectancy. The promissory note, loan, land contract, or mortgage purchased during the look back period or after eligibility is established is actuarially sound if, when it was purchased, the lender was expected to live long enough to receive payment in full during their lifetime. 2. Equal Payments The repayment terms must include these conditions: a. Repayments must be in equal amounts during the term of the loan. b. Deferrals of repayment are prohibited. c. Balloon payments are prohibited. Note Voluntary prepayments that exceed the required regular monthly payment amount (“paying extra”) are not balloon payments. 3. No Cancellation The terms must not allow cancellation of repayment of the balance upon the death of the lender. 4. Originally Allowed Cancellation but Terms were Amended If the promissory note, loan, land contract, or mortgage purchased during the look back period or after eligibility is established allows cancellation of repayment of the balance upon the death