This article is a section taken from MA for Long-Term Care Services (MA-LTC) a part of the revisions and additions to the Minnesota Health Care Program Eligibility Policy Manual.
Naming DHS a Preferred Remainder Beneficiary
When a person requests MA for Long-Term Care Services (MA-LTC), the person and his or her spouse must name Minnesota Department of Human Services (DHS) as a preferred remainder beneficiary of their annuity, if the annuity meets certain requirements.
The policies described in this section do not apply to employment-based pension plans held in the form of an annuity. See MA for People Who Are Age 65 or
Older and People Who Are Blind or Have a Disability (MA-ABD) Retirement Accounts and Retirement Plans.
Preferred Remainder Beneficiary
The preferred remainder beneficiary is the person or entity required to be named as a beneficiary of a death benefit under an annuity. A preferred remainder beneficiary has preferential rights to the death benefit. As the preferred remainder beneficiary, DHS may receive up to the total amount of MA paid on behalf of the person and their spouse when a death benefit becomes payable under the terms of the annuity contract.
DHS is a secondary beneficiary if the person’s spouse, child under 18, or a child of any age who is certified disabled (based upon the criteria of the Supplemental Security Income (SSI) program) is named a beneficiary under the annuity and is alive at the time the death benefit is payable.
A Person Must Name DHS a Preferred Remainder Beneficiary
People who request or renew eligibility for MA-LTC and their spouses are required to designate DHS as a preferred remainder beneficiary for each annuity that meets all of the following criteria:
- they have an ownership interest in the annuity;
- at least one annuity transaction occurred within the lookback period; and
- the annuity provides for a death benefit and allows someone other than a surviving spouse to be named a beneficiary.
Verification from the annuity issuer is required if a person or their spouse claims it is not possible for DHS to be named a preferred remainder beneficiary.
Failure to Name DHS the Preferred Remainder Beneficiary
If a person or their spouse fails to name DHS the preferred remainder beneficiary, the appropriate value of the annuity must be determined to calculate a period of ineligibility based upon the phase of the annuity as follows:
- The value of the annuity is the current cash value (cash surrender value) of the annuity if the annuity is in the accumulation phase.
- The value of the annuity is the total amount of money annuitized if the annuity is in the annuitization phase.
The period of ineligibility is calculated by dividing the value of the annuity by the MA Statewide Average Payment for a Skilled Nursing Facility (SAPSNF) in effect in the month the applicant was found to be otherwise eligible for MA-LTC. The period of ineligibility is the full number of months plus any partial months resulting from this calculation.
- The partial month is an amount that the MA-LTC payment is reduced in that month.
- If the period of ineligibility is less than a full month of eligibility for MA-LTC, the MA-LTC payments are reduced by the remaining amount.
The period of ineligibility begins with the first month for which the person is requesting and meets all of the other criteria to receive MA-LTC. The Notice of Action for Payment of Long-Term Care Services (DHS-4915) is a required notice when a person fails to name DHS a preferred remainder beneficiary. This is the official notification of denial or ending of MA-LTC.
If the person is eligible for MA during the period of ineligibility, MA will pay for non-LTC services.
Cooperation after a Period of Ineligibility is Imposed
When a person cooperates after a period of ineligibility for MA-LTC due to failure to name DHS a preferred remainder beneficiary, eligibility for MA-LTC begins no earlier than the first day of the month in which the person:
- cooperates and names DHS a preferred remainder beneficiary, and
- meets all other eligibility requirements.
A person is not automatically eligible for MA-LTC upon the end of a period of ineligibility. Ending the period of ineligibility only eliminates a barrier for MA-LTC identified in a previous request. When a period of ineligibility ends, a determination must be made to ensure the person currently meets all eligibility requirements for MA-LTC.
- People not enrolled in MA when the period of ineligibility ends must reapply for MA if it is outside the application-processing period associated with the last completed application.
- People enrolled in MA when the period of ineligibility ends must submit an MHCP Request for Payment of Long-Term Care Services (DHS-3543) if they had a gap of one calendar month or more between the date the period of ineligibility was imposed and the date of the request for MA-LTC.
Requirements for Annuity Issuers
Annuity issuers are required to communicate certain information to county, tribal, and state agencies about annuities that designate DHS as a preferred remainder beneficiary. Annuity issuers who receive a signed and dated “Issuer of Annuity Notice of Obligation” (DHS-5037) are required to:
- Confirm that DHS has been named a preferred remainder beneficiary.
- Notify the county agency of changes made to the amount of income or principal being withdrawn from the annuity and to the beneficiary designation by the annuity owner.
- Inform DHS when the death benefit becomes payable and request the amount of MA subject to recovery by DHS.
- If applicable, describe a valid reason why it is not possible to name DHS a preferred remainder beneficiary.
Non-cooperation by the issuer to name DHS a preferred remainder beneficiary of the annuity is not a valid reason for DHS not to be named a preferred remainder beneficiary.
Forms Required to Name DHS a Preferred Remainder Beneficiary
A person must complete the following forms upon request of the county, tribal, or state agency:
- Annuity Beneficiary Designation Form – Annuity Owner Seeking Payment of Long-Term Care Services (DHS-5036). This form is used when the person requesting MA-LTC owns the annuity individually or jointly with their spouse or someone else.
- Annuity Beneficiary Designation Form – Annuity Owner is the Spouse of Person Seeking Payment of Long-Term Care Services (DHS-5036A). This form is used when the spouse of the person requesting MA-LTC is the owner of the annuity or is a co-owner of the annuity with someone other than the person requesting MA-LTC.
The county, tribal, or state agency will send an Issuer of Annuity Notice of Obligation (DHS-5037) to the annuity issuer along with the signed DHS-5036 or DHS-5036A. The DHS-5037 provides the annuity issuer instructions regarding:
Naming DHS as a preferred remainder beneficiary
Completing the Confirmation/Status of Request portion of the form and returning it to the county agency within 30 days
The annuity issuer’s ongoing obligation to communicate with the county and state agency under federal and state laws when DHS is named a preferred remainder beneficiary.
Change in Annuity Income or Preferred Remainder Beneficiary
Any information that indicates a change since the last request for MA-LTC in either the amount of income or principal the person or their spouse is withdrawing from the annuity or that DHS is no longer named as a preferred remainder beneficiary must be evaluated to determine if:
- An uncompensated transfer has occurred
- A penalty period applies
- A change in the amount of available income from the annuity has occurred
Minnesota Statutes, section 256B.056, subdivision 11
Minnesota Statutes, section 256B.0595(e)
United States Code, title 42, section 1396p(e)
CREDIT: The content of this post has been copied or adopted from the Minnesota Healthcare Programs Eligibility Policy Manual, originally published by the Minnesota Department of Human Services.
This is also part of a series of posts on Minnesota Healthcare Eligibility Policies.