Pennsylvania Issues Post-Zahner Operations Memo on “Evaluating Non-Qualified Annuities”

Following the Third Circuit’s ruling in the Zahner case in September 2015, Pennsylvania’s Department of Human Services recently issued an Operations Memo providing guidance on how the state will evaluate the effect on Medicaid eligibility of so-called “non-qualified” annuities purchased during the look-back period.   The Ops Memo #15-11–01, issued November 16, 2015, provides in part:

Prior to the Zahner decision, in order to be actuarially sound, an annuity had to have a payment term that was equal to the individual’s life expectancy.  If the annuity was either shorter or longer than the annuity owner’s life expectancy found on the Life Expectancy Tables in LTC Handbook Chapter 440 Appendix D, then the purchase price of the annuity was used to determine an ineligibility period for payment of LTC [long term care] services. 

 

Effective immediately, due to the Zahner decision, the definition of “actuarially sound” has changed.  Annuities will now be considered actuarially sound if the annuity payment term is either short than, or equal to, the owner’s life expectancy.

It will be interesting to see “what happens next” in the world of Medicaid planning.  My thanks to Pennsylvania Elder Law attorney and all-round research guru Rob Clofine for sharing the link.