Current through Register Vol. 63, No. 9, September 1, 2024
(1) For the
purposes of this rule:
(a) "Actuarially sound"
means a commercial annuity which pays principal and interest out in equal
monthly installments over the actuarial life expectancy of the annuitant, with
no deferral and no balloon payments. For purposes of this definition, the
actuarial life expectancy is established by the Periodic Life Table of the
Office of the Chief Actuary of the Social Security Administration, and, for
transactions (including the purchase of an annuity) occurring on or after July
1, 2008, the payout period must be within 12 months of the actuarial life
expectancy, measured at the time of purchase.
(b) For an individual, an annuity does not
include benefits that are set up and accrued in a regularly funded retirement
account while an individual is working, whether maintained in the original
account or used to purchase an annuity, if the Internal Revenue Service
recognizes the account as dedicated to retirement or pension purposes. (The
treatment of pension and retirement plans is covered in OAR
461-145-0380.)
(c) The definition of "child" in OAR
461-001-0000 does not
apply.
(d) "Child" means a
biological or adoptive child who is:
(A) Under
age 21; or
(B) Any age and meets
the Social Security Administration criteria for blindness or
disability.
(e)
"Commercial annuity" means a contract or agreement (not related to employment)
by which an individual receives annuitized payments on an investment for a
lifetime or specified number of years.
(2) An annuity that does not make regular
payments for a lifetime or specified number of years will not be excluded from
countable resources under this rule.
(3) When an individual applies for medical
assistance, both initially and at periodic redetermination (see OAR
461-115-0050 and
461-115-0430), the individual
must report any annuity owned by the individual or a spouse of the
individual.
(4) By signing the
application for assistance, an individual and the spouse of an individual agree
that the Department, by virtue of providing medical assistance, becomes a
remainder beneficiary as described in sections (8) and (10) of this rule, under
any commercial annuity purchased on or after February 8, 2006, unless the
annuity is included in the community spouse's resource allowance under OAR
461-160-0580(2)(c).
(5) If the Department is notified about a
commercial annuity, the Department will notify the issuer of the annuity about
the right of the Department as a preferred remainder beneficiary, as described
in sections (8) and (10) of this rule, in the amount of medical assistance
provided to the individual.
(6) If
an individual or a spouse of an individual purchases or transfers a commercial
annuity prior to January 1, 2006, the following applies:
(a) If the individual is in a nonstandard
living arrangement (see OAR
461-001-0000), the transaction
may be subject to the rules on asset transfers at OAR
461-140-0210 and following. For
an annuity that is not disqualifying or the disqualification period has already
been served, the annuity is not counted as a resource; payments are counted as
unearned income to the payee.
(b)
If the individual is in a standard living arrangement, the annuity payments are
counted as unearned income to the payee.
(7) Sections 8 and 9 of this rule apply to a
commercial annuity if:
(a) The individual is
in a nonstandard living arrangement, and the individual or the spouse of the
individual purchases an annuity from January 1, 2006 through June 30, 2006;
or
(b) The individual is in a
standard living arrangement (see OAR
461-001-0000), and the
individual or the spouse of an individual purchase an annuity on or after
January 1, 2006.
(8) A
commercial annuity covered by section (7) of this rule is counted as a resource
unless the annuity is excluded by meeting the following requirements:
(a) If a married individual is an annuitant,
the annuity must meet the requirements of subsection (8)(d) of this
rule.
(b) If an unmarried
individual is an annuitant, the annuity must meet the requirements of
subsection (8)(d) of this rule, and the annuity must specify that upon the
death of the individual, the first remainder beneficiary is either of the
following:
(A) The Department, for all funds
remaining in the annuity up to the amount of medical assistance provided on
behalf of the individual.
(B) The
child of the individual, if the Department is the next
remainder beneficiary (after this child), up to the amount of medical
assistance provided on behalf of the individual, in the event that the child
does not survive the individual.
(c) If a spouse of an individual is the
annuitant, the annuity must meet the requirements of subsection (8)(d) of this
rule, and the annuity must specify that, upon the death of the spouse of the
individual, the first remainder beneficiaries are either of the following:
(A) The individual, in the event that the
individual survives the spouse; and the Department, in the event that the
individual does not survive the spouse, for all funds remaining in the annuity
up to the amount of medical assistance provided on behalf of the
individual.
(B) A
child of the spouse; and the individual in the event that this
child does not survive the spouse.
(d) An annuity covered by section (7) of this
rule may not be excluded unless the annuity meets all of the following
requirements:
(A) The annuity is
irrevocable.
(B) The annuity must
be actuarially sound.
(C) The
annuity is issued by a business that is licensed and approved to issue a
commercial annuity by the state in which the annuity is purchased.
(9) If an annuity is
excluded as a resource under section (8) of this rule, the annuity payments are
counted as unearned income to the payee. If an annuity is a countable resource
under section (8) of this rule, the cash value is equal to the amount of money
used to establish the annuity, plus any additional payments used to fund the
annuity, plus any earnings, minus any regular monthly payments already
received, minus early withdrawals, and minus any surrender fees.
(10) This section lists the requirements for
a commercial annuity purchased by the individual or the spouse of the
individual on or after July 1, 2006, when an individual is in a nonstandard
living arrangement, and the annuity names the individual or the community
spouse as the annuitant. Annuities that meet all of the requirements of this
section are counted as unearned income to the payee. The treatment of annuities
that do not meet all requirements of this section is covered in sections (11)
and (12) of this rule.
(a) The annuity must
comply with one of the following paragraphs:
(A) The first remainder beneficiary is the
spouse of the individual; the Department is named as the second remainder
beneficiary for up to the total amount of medical assistance paid on behalf of
the individual; and in the event that the spouse transfers any of the remainder
of the annuity for less than fair market value (see OAR
461-001-0000), the Department is
the second remainder beneficiary for up to the total amount of medical
assistance paid on behalf of the individual.
(B) The first remainder beneficiary is the
annuitant's child; the Department is named as the second
remainder beneficiary for up to the total amount of medical assistance paid on
behalf of the individual; and in the event that the child or a
representative on behalf of the child transfers any of the
remainder of the annuity for less than fair market value, the
Department is the second remainder beneficiary for up to the total amount of
medical assistance paid on behalf of the individual.
(C) The first remainder beneficiary is the
Department for up to the total amount of medical assistance paid on behalf of
the individual.
(b) The
annuity must be irrevocable.
(c)
The annuity must be non-assignable.
(d) The annuity must be actuarially
sound.
(e) The annuity is
issued by a business that is licensed and approved to issue a
commercial annuity by the state in which the annuity is
purchased.
(11) If the
individual is the annuitant and a commercial annuity does not
meet all of the requirements of subsections (10) (a), (10)(d), and (10)(e) of
this rule, or the spouse of the individual is the annuitant and a
commercial annuity does not meet the requirements of
subsections (10)(a), (10)(d), and (10)(e) of this rule, there is a
disqualifying transfer of assets under OAR
461-140-0210 and following. See
OAR 461-140-0296(5) and
(6) for calculation of the disqualification
period. To the extent to which there is a disqualifying transfer of assets
under this section, the annuity is not counted as a resource.
(12) If the annuity does not meet all of the
requirements of subsections (10)(b) or (10)(c) of this rule, the annuity is
counted as a resource with cash value equal to the amount of money used to
establish the annuity, plus any additional payments used to fund the annuity,
plus any earnings, minus any regular monthly payments already received, minus
early withdrawals, and minus any surrender fees.
Statutory/Other Authority: ORS
411.060,
411.070,
411.083 &
411.404
Statutes/Other Implemented: ORS
411.060,
411.070,
411.083 &
411.404
