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Recovery on Annuities Language Released

Instructions Released

The State Medicaid Manual instructions regarding recovery on annuities was released by HCFA in Transmittal 75 on January 11, 2001. The effective date of the instructions is noted as February 15, 2001.

For a full copy of HCFA State Medicaid Manual Part 3 – Eligibility, Transmittal 75, download from:

The revisions to § 3810, Medicaid Estate Recoveries, include the following:

  1. Expansion of recovery to groups of dual eligibles (Medicare/Medicaid)
  2. Premium payments made to HMOs on behalf of Medicaid beneficiaries are subject to recovery. Note that DHS just informed Medi-Cal/HMO beneficiaries that Medi-Cal will pick up any premiums charged by the HMO. Consumers should be warned that these payments can be subject to recovery.
  3. Identifies assets and resources of Native Americans that are subject to recovery and those that are exempt from recovery.
  4. Excludes certain government reparation payments to special populations from recovery.
  5. Defines a home of modest value (but does not require the states to use it).
  6. Permits the states to recover from annuities if the state (like California) uses the expanded definition of estate.

Regulations Required

Note that the instructions are clear that the annuity provisions are effective for deaths or estates that are opened 90 days after the publication of this manual provision and after the State meets applicable State and Federal law for appropriate notice and due process. We assume that “appropriate” notice means the promulgation of regulations. The latest word from the Recovery Unit is that DHS is in the process of preparing regulations that would enable recovery from annuities.

Inform Consumers

Anyone who has sold, or who is currently marketing, annuities to a potential Medi-Cal recipient as a part of “Medi-Cal Planning” should be aware that recovery is more than likely, if the annuity is in the Medi-Cal beneficiary’s name.

Clients should be informed of the potential for recovery. Agents should also be aware that, effective July 1, 2001, specific disclosures will be required when marketing or selling any financial product on the basis of its treatment under the Medi-Cal program. (See California Insurance Code § 798.8)

From the March 2001 Legal Network News

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