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West Virginia Income Maintenance Manual Chapter 24

West Virginia Income Maintenance Manual Page 59 Chapter 24 Long Term Care

• For annuities purchased prior to February 8, 2006, use the Periodic Life Tables found in Appendix C. The penalty is considered to have occurred at the time the annuity was purchased prior to February 8, 2006. Only the amount that is not actuarially sound is treated as an uncompensated transfer. • For annuities purchased on or after February 8, 2006, use the Period Life Tables in Appendix D of this chapter. Meets Criteria Example: A 65-year-old man purchases a $10,000 irrevocable, non-assignable annuity on July 28, 2008 which is to be paid over 10 years in equal payment amounts, and names the State of West Virginia as the second remainder beneficiary after his disabled son. His life expectancy, according to Appendix D, is 16.05 years. The annuity is irrevocable, non-assignable, actuarially sound, provides equal payment amounts and the state is named as a secondary remainder beneficiary. No transfer of resources has taken place. Life Expectancy Example: An 80-year-old man purchases a $10,000 annuity on January 1, 2006 to be paid over 10 years. According to Appendix C, his life expectancy is only 6.98 years. Therefore, the amount which will be paid out by the annuity for 3.02 years is considered an uncompensated transfer of resources that occurred at the time the annuity was purchased on January 1, 2006. Unequal Payments Example: A 60-year-old woman purchases an annuity on March 13, 2007 which is to be paid over 10 years with a balloon payment in the tenth year. The annuity names the State of West Virginia as the remainder beneficiary and is considered an uncompensated transfer of resources since it does not provide for equal monthly payments. Retirement Annuity Example: A 65-year-old woman retired from a company on December 21, 2007 with an annuity that was purchased by the employer as part of her bona fide retirement plan. The annuity is not considered an uncompensated transfer of resources since it was purchased on her behalf as part of her bona fide retirement plan. 24.8.2.E.3 Annuity-Related Transactions Other Than Purchases ➢ Transactions Subject to Penalty NOTE: The Deficit Reduction Act of 2005 (DRA) was signed into law on February 8, 2006. The DRA made significant changes to the policies for long term care asset transfers.