Step 3
The final step in the evaluation process, if it is a commercial annuity from which equal and non-deferred payments are received, is to determine if the annuity is actuarially sound.
Definition: An annuity is actuarially sound if the cash value as of the date of annuitization is expected to pay out in full within the expected lifetime of MA-LTC client or their spouse.- If the annuity is actuarially sound, a transfer did not occur. The annuity transfer evaluation requirement has been met..
- If the annuity is not actuarially sound, the uncompensated transfer amount is the total amount of annuitized funds that will not be returned within the life expectancy of a person.
Annuitized Funds
- Amount of Funds Returned within Applicable Lifetime
= Uncompensated Transfer Amount.
Note: When determining actuarial soundness for a term-certain annuity only subtract the amount that will be returned within the person’s lifetime or by the end of the annuity’s term, whichever is earlier.
A process has been established to help you determine if an annuity is actuarially sound. This process will be discussed in an upcoming section.
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Transfer Evaluation - Evaluation Method 1