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Spouse Annuities

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DRA Adds Requirements for Annuities

The Deficit Reduction Act of 2005 adds the following requirements for annuities:

-The requirement to disclose, in an application for long-term care services, information regarding any interest an applicant or community spouse may have in an annuity.

-The requirement to name the State as a remainder beneficiary in annuities in which the applicant or spouse is the annuitant; and

-Provisions for the treatment of the purchase of certain annuities as a transfer for less than fair market value. The DRA's requirements are extremely complicated. Click here to view the annuity provisions of the DRA.

In general, the purchase of an annuity is to be treated as a penalized disposal of an asset for less than fair market value. However, Section 6012 of the DRA creates several exceptions. Using these exceptions, individuals and couples can continue to reduce excess resources and qualify for Medicaid through the purchase of an annuity.


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