Method 2 - Step 3
Step 3 of the Method 2 evaluation process is the same as Step 3 for Method 1: 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 the person requesting MA payment of LTC services or his or her spouse.- If the annuity is actuarially sound, an uncompensated transfer has not occurred. The annuity transfer evaluation requirement has been met and MA-LTC eligibility can be approved.
- 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 applicable life expectancy.
Annuitized Funds
- Amount of Funds Returned within 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, which ever is earlier.
The process for determining if an annuity is actuarially sound will be discussed in the next section.
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Transfer Evaluation - Evaluation Method 2