SECTION 358.335. Treatment of Annuities with a Purchase or Transaction Date on or after February 8, 2006

(a) This section describes the Texas Health and Human Services Commission's (HHSC's) treatment of nonemployment-related annuities purchased or having a transaction date on or after February 8, 2006. In this section, a nonemployment-related annuity means a revocable or irrevocable annuity a person may purchase to provide income.

(b) A nonemployment-related annuity is not a countable resource if the annuity:

(1) is irrevocable;

(2) is nonassignable;

(3) provides for payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made;

(4) is guaranteed to return within the person's life expectancy at least the person's principal investment (that is, it is actuarially sound, as determined in accordance with actuarial publications of the Office of the Chief Actuary of the United States Department of Health and Human Services); and

(5) names the state of Texas as the remainder beneficiary in the first position for at least the total amount of Medicaid paid on behalf of a person in an institutionalized setting.

(c) If a person in an institutionalized setting is married and the spousal impoverishment provisions of §358.413 of this subchapter (relating to Spousal Impoverishment Treatment of Income and Resources) apply, a nonemployment-related annuity is not a countable resource if the annuity meets the requirements of subsection (b)(1) - (4) of this section and the annuity:

(1) names the state of Texas as the remainder beneficiary in the first position for at least the total amount of Medicaid paid on behalf of the person in an institutional setting; or

(2) names the state of Texas in the second position if the community spouse or a minor or disabled child is named in the first position.

(d) A nonemployment-related annuity that is revocable is a countable resource. For a revocable nonemployment-related annuity, HHSC:

(1) uses fair market value to determine the value of the resource; and

(2) applies transfer-of-assets provisions in Division 4 of this subchapter (relating to Transfer of Assets) based on the amount already paid out of the annuity.

(e) A nonemployment-related annuity that is irrevocable is not a countable resource. For an irrevocable nonemployment-related annuity, HHSC:

(1) applies transfer-of-assets provisions in Division 4 of this subchapter to the purchase price of the annuity; and

(2) for a transaction involving an existing annuity, applies transfer-of-assets provisions to the remaining payout value at the time of the transaction.

(f) Income from an annuity that is not a countable resource is treated in accordance with 20 CFR §§416.1120 - 416.1124.

Source Note: The provisions of this §358.335 adopted to be effective September 1, 2009, 34 TexReg 5497