For Medicaid Recipient, Either Spouse's Annuity must Name State as Beneficiary

Category: Elder Law,

Courtesy of Elderlawanswers.com, the DRA has been "corrected" to clarify that an annuity owned by a Medicaid recipient or his or her spouse must name the state as the primary remainder beneficiary for Medicaid benefits paid to either spouse, not just benefits paid on behalf of the owner of the annuity.

Tax Bill Makes Change in DRA Annuity Provision - Elder Law Answers Articles: "The recently enacted Tax Relief and Health Care Act of 2006, H.R. 6111, includes several “technical corrections” to the Medicaid provisions of the Deficit Reduction Act of 2005 (DRA). One was made to the annuity rules in the Deficit Reduction Act of 2005 (DRA) transfer-of-asset provisions.

The DRA requires that Medicaid long-term care applicants name the state as the remainder beneficiary of annuities in which they have an interest, in an amount equal to what the enrollees receive in coverage from the state, 42 U.S.C. §1396p(c)(1)(F)(i). The DRA provided that state remainder rights were equal to the amount paid on behalf of an “annuitant”; the Tax Relief bill replaced this with “institutionalized individual.”

Thus, if the wife of a nursing home resident purchases an annuity, under current law she must name the state as the remainderman for her own potential benefits. Under the change, she may have to name the state as the remainderman for her husband’s care instead. The change is retroactive to the bill's enactment."