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KENTUCKY DEPARTMENT OF SOCIAL SERVICES IS REVERSED ON MEDICAID ANNUITY Click here to save article in WinZip.exe format to your PC An applicant for Medicaid in Kentucky purchased an immediate annuity with a single premium payment. The annuity was actuarially sound in that the payments were to be made to the applicant for life based on life expectancy. Nevertheless, Kentucky Medicaid treated the annuity as a transfer or gift resulting in a period of ineligibility because the purchaser of the annuity could not demonstrate that the purchaser has nothing at all to do with qualifying for Medicaid. An application was made to the Center for Medicare and Medicaid (the Center) for its opinion about whether it was appropriate for Kentucky Medicaid to condition the approval of the Medicaid application on a showing of the purpose being for reasons having nothing to do with obtaining Medicaid. The Center concluded the purpose test can not be used. Thus so long as the annuity is actuarially sound, the test of a bona fide annuity had been established and no gift had been made resulting in a period of ineligibility.
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