State Medicaid Directors Ask CMS To Change Annuity Rules

Conceding defeat in the courts, the National Association of State Medicaid Directors (NASMD) has sent a letter to the Center for Medicare and Medicaid Services (CMS) requesting that the agency revisit its treatment of community spouse annuities.

In the Omnibus Budget Reconciliation Act of 1993, Congress delegated the treatment of annuities in the Medicaid program to the Secretary of Health and Human Services. CMS then exercised that authority in Transmittal 64 to the State Medicaid Manual which contained the Secretary’s determination that annuities were non-countable resources under Medicaid. The treatment was modified somewhat by the Deficit Reduction Act of 2005 (DRA), but recent federal and state court cases have upheld the Secretary’s decision that the purchase of DRA compliant annuities by community spouses are non-countable, and can protect resources in excess of the Community Spouse Resource Allowance. NASMD now wants CMS to change its rules so that annuities will be treated like trusts which would make them countable resources under the Medicaid rules.

A copy of the NASMD letter is available at:

Updated on March 22, 2010 – The New Jersey State Bar Association Elder and Disability Law Section, on behalf of the National Academy of Elder Law Attorneys (NAELA),  prepared a response to the  NASMD’s letter to CMS as follows – NAELA Response

Source: Elder Law Listserv