Section 17-1725.1-52 - Treatment of annuities(a) An individual who requires coverage of long-term care services or their community spouse shall disclose whether or not the individual or their community spouse has any ownership interest in annuities at the time of application and at each subsequent redetermination of Medicaid eligibility. (1) An individual shall not be eligible for coverage of long-term care services if the institutionalized individual or their community spouse fails to disclose any interest in an annuity.(2) The disclosure shall be required regardless of whether the annuity is irrevocable or treated as an asset under this chapter.(b) The portion of the funds of an annuity purchased by the institutionalized individual or their community spouse prior to February 8, 2006, that is not actuarially sound and is payable beyond the life expectancy of the annuitant shall be considered transferred.(c) All funds used to purchase an annuity on or after February 8, 2006, by the institutionalized individual or their community spouse shall be considered transferred if the department is not named as a remainder beneficiary in the first position, or in a position behind the community spouse and the institutionalized individual's minor child under the age of twenty-one years or who is blind or disabled, for the amount of medical assistance paid on behalf of the institutionalized individual. (1) The department shall notify the issuer of an annuity issued on or after February 8, 2006, of the right of the department to be a preferred remainder beneficiary.(2) The issuer may inform other remainder beneficiaries of the department's remainder interest.(d) Funds used to purchase an annuity on or after February 8, 2006, by the institutionalized individual or the community spouse, or on behalf of the institutionalized individual or their community spouse, shall not be considered transferred if: (1) The annuity is considered: (A) An individual retirement annuity that meets the requirements of section 408(b) of the IRC; or(B) A deemed IRA under a qualified employer plan under section 408(q) of the IRC; or(2) The annuity is purchased with proceeds from one of the following: (A) A traditional IRA under section 408(a) of the IRC;(B) An account or trust which is treated as a traditional IRA under section 408(c) of the IRC;(C) A simplified retirement account under section 408(p) of the IRC;(D) A simplified employee pension under section 408(k) of the IRC; or(E) A Roth IRA under section 408A of the IRC; or(3) The annuity meets all of the following requirements:(A) Is actuarially sound as determined by the department in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration;(B) Is irrevocable, non-assignable and cannot be sold;(C) Makes equal payments throughout the term of the contract and does not defer payments or allow balloon payments; and(D) Cannot be cancelled upon the death of the institutionalized individual or the community spouse.(e) Certain transactions or changes which occur on or after February 8, 2006, that affect the terms of a qualified annuity that was purchased by the institutionalized individual or their community spouse prior to February 8, 2006, shall be considered a transfer of asset to include, but are not limited to the: (1) Course of payment made by the annuity;(2) Treatment of income or principal of the annuity to include additions of principal, elective withdrawals or requests to change the distribution of the annuity; or(3) Election to annuitize the contract.(f) Routine changes or automatic events or both, made by the institutionalized individual or the community spouse for an annuity that was purchased prior to February 8, 2006, that are not considered a transfer of asset include: (1) Routine changes to include, but are not limited to notifications of address change, death, or divorce of a remainder beneficiary.(2) Changes based on the terms of an annuity which existed prior to February 8, 2006, which do not require a decision, election or action to be effective.(3) Changes that are beyond the control of the institutionalized individual or the community spouse to include, but are not limited to, changes in the law or the issuer's policies.(g) Transactions or changes made for annuities purchased prior to February 8, 2006, that do not meet the criteria of subsection (f) of this section as well as a qualified annuity that is transferred to anyone except the community spouse or to another individual for the sole benefit of the community spouse, the individual's child, or to a trust as described in section 1917(c)(2)(B) of the Social Security Act, shall be treated as a transfer of asset.Haw. Code R. § 17-1725.1-52
[Eff 09/30/13] (Auth: HRS § 346-14; 42 C.F.R. §431.10; 42 U.S.C. §§1396(a), 1396p(c) and (e), 1396r-5(c) ) (Imp: 42 U.S.C. §§1396(a), 1396p(c) and (e), 1396r - 5(c) )