HCFA Transmittal 64 Life Expectancy and Remainder Tables
Rev. 64 3-3-109.12
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GENERAL AND CATEGORICAL
3258.9 ELIGIBILITY REQUIREMENTS 11-94
At the option of the State, you may also withhold reimbursement for services provided to noninstitutionalized individuals for other long term care services for which medical assistance is otherwise available under the State plan to individuals requiring long term care. Such services might include, for example, private duty nursing. However, the specific services involved depend on your own State plan.
3258.9 Treatment of Certain Kinds of Transfers for Less Than Fair Market Value.--Certain financial transactions or purchases may constitute a transfer of assets for less than fair market value. Treat the following as described.
A. Life Estates.--Under a life estate, an individual who owns property transfers ownership of that property to another individual while retaining, for the rest of his or her life (or the life of another person), certain rights to that property. Generally, a life estate entitles the owner of the life estate (the grantor) to possess, use, and obtain profits from the property as long as he or she lives. However, actual ownership of the property has passed to another individual.
In a transaction involving a life estate, a transfer of assets is involved. This transfer is for less than fair market value whenever the value of the transferred asset is greater than the value of the rights conferred by the life estate.
In determining whether a penalty is assessed because of a life estate and how long that penalty should be, compute the value of the asset transferred and the value of the life estate, and calculate the difference between the two.
The value of the asset transferred is computed by using the regular Medicaid rules for determining the value of assets. To calculate the value of the life estate, use the life estate table below (from POMS SI 01140.120). Determine the value of the life estate by multiplying the current market value of the property by the life estate factor that corresponds to the grantor’s age. The value of the life estate is then subtracted from the value of the asset transferred to determine the portion of the asset that was transferred for less than fair market value. Or, if only the value of the transferred portion is needed, multiply the current market value of the asset by the remainder factor.
EXAMPLE: Mrs. Able, age 65, owns a house with a small farm attached to it, worth $100,000 in total. She deeds the house and farm to her son but retains a life estate in the property. Under the terms of the life estate, Mrs. Able is entitled to live in the house for the rest of her life and to any produce, income, etc. generated by the farm. To determine the value of Mrs. Able’s life estate, the current market value of the property ($100,000) is multiplied by a life estate factor corresponding to Mrs. Able§s age in the table (.67970), resulting in a life estate worth $67,970. The penalty is assessed for the difference between the value of the asset transferred ($100,000) and the value of the life estate ($67,790), or a penalty based on $32,030 of assets transferred for less than fair market value.
Some States allow life estates with powers, wherein the owner of the property creates a life estate for himself or herself, retaining the power to sell the property, with a remainder interest to someone else, e.g., a child. Since the life estate holder retains the power to sell the property, its value as a
3-3-109.13 Rev. 64
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GENERAL AND CATEGORICAL
11-94 ELIGIBILITY REQUIREMENTS 3258.9 (Cont.)
resource is its full equity value. In this situation, the individual has not transferred anything of value, because he or she can terminate the life estate at any time and restore full ownership to himself or herself. Instead, the full value of the asset in question is treated as a countable resource to the individual (assuming, of course, that it is not an otherwise excluded resource).
LIFE ESTATE AND REMAINDER INTEREST TABLE
(See 26 CFR 20.2031-7 and 49 FR Vol. 49 No. 93/5-11-84.)
AGE LIFE ESTATE REMAINDER AGE LIFE ESTATE REMAINDER
0 .97188 .02812 35 .93868 .06132
1 .98988 .01012 36 .93460 .06540
2 .99017 .00983 37 .93026 .06974
3 .99008 .00992 38 .92567 .07433
4 .98981 .01019 39 .92083 .07917
5 .98938 .01062 40 .91571 .08429
6 .98884 .01116 41 .91030 .08970
7 .98822 .01178 42 .90457 .09543
8 .98748 .01252 43 .89855 .10145
9 .98663 .01337 44 .89221 .10779
10 .98565 .01435 45 .88558 .11442
11 .98453 .01547 46 .87863 .12137
12 .98329 .01671 47 .87137 .12863
13 .98198 .01802 48 .86374 .13626
14 .98066 .01934 49 .85578 .14422
15 .97937 .02063 50 .84743 .15257
16 .97815 .02185 51 .83674 .16126
17 .97700 .02300 52 .82969 .17031
18 .97590 .02410 53 .82028 .17972
19 .97480 .02520 54 .81054 .18946
20 .97365 .02635 55 .80046 .19954
21 .97245 .02755 56 .79006 .20994
22 .97120 .02880 57 .77931 .22069
23 .96986 .03014 58 .76822 .23178
24 .96841 .03159 59 .75675 .24325
25 .96678 .03322 60 .74491 .25509
26 .96495 .03505 61 .73267 .26733
27 .96290 .03710 62 .72002 .27998
28 .96062 .03938 63 .70696 .29304
29 .95813 .04187 64 .69352 .30648
30 .95543 .04457 65 .67970 .32030
31 .95254 .04746 66 .66551 .33449
32 .94942 .05058 67 .65098 .34902
33 .94608 .05392 68 .63610 .36390
34 .94250 .05750 69 .62086 .37914
Rev. 64 3-3-109.14
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GENERAL AND CATEGORICAL
3258.9 (Cont.) ELIGIBILITY REQUIREMENTS 11-94
LIFE ESTATE AND REMAINDER INTEREST TABLE (Cont.)
AGE LIFE ESTATE REMAINDER AGE LIFE ESTATE REMAINDER
70 .60522 .39478 90 .28221 .71779
71 .58914 .41086 91 .26955 .73045
72 .57261 .42739 92 .25771 .74229
73 .55571 .44429 93 .24692 .75308
74 .53862 .46138 94 .23728 .76272
75 .52149 .47851 95 .22887 .77113
76 .50441 .49559 96 .22181 .77819
77 .48742 .51258 97 .21550 .78450
78 .47049 .52951 98 .21000 .79000
79 .45357 .54643 99 .20486 .79514
80 .43659 .56341 100 .19975 .80025
81 .41967 .58033 101 .19532 .80468
82 .40295 .59705 102 .19054 .80946
83 .38642 .61358 103 .18437 .81563
84 .36998 .63002 104 .17856 .82144
85 .35359 .64641 105 .16962 .83038
86 .33764 .66236 106 .15488 .84512
87 .32262 .67738 107 .13409 .86591
88 .30859 .69141 108 .10068 .89932
89 .29526 .70474 109 .04545 .95455
B. Annuities.--Section 1917(d)(6) of the Act provides that the term "trust" includes an annuity to the extent and in such manner as the Secretary specifies. This subsection describes how annuities are treated under the trust/transfer provisions.
When an individual purchases an annuity, he or she generally pays to the entity issuing the annuity (e.g., a bank or insurance company) a lump sum of money, in return for which he or she is promised regular payments of income in certain amounts. These payments may continue for a fixed period of time (for example, 10 years) or for as long as the individual (or another designated beneficiary) lives, thus creating an ongoing income stream. The annuity may or may not include a remainder clause under which, if the annuitant dies, the contracting entity converts whatever is remaining in the annuity into a lump sum and pays it to a designated beneficiary.
Annuities, although usually purchased in order to provide a source of income for retirement, are occasionally used to shelter assets so that individuals purchasing them can become eligible for Medicaid. In order to avoid penalizing annuities validly purchased as part of a retirement plan but to capture those annuities which abusively shelter assets, a determination must be made with regard to the ultimate purpose of the annuity (i.e., whether the purchase of the annuity constitutes a transfer of assets for less than fair market value). If the expected return on the annuity is commensurate with a reasonable estimate of the life expectancy of the beneficiary, the annuity can be deemed actuarially sound.
3-3-109.15 Rev. 64
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GENERAL AND CATEGORICAL
11-94 ELIGIBILITY REQUIREMENTS 3258.9 (Cont.)
To make this determination, use the following life expectancy tables, compiled from information published by the Office of the Actuary of the Social Security Administration. The average number of years of expected life remaining for the individual must coincide with the life of the annuity. If the individual is not reasonably expected to live longer than the guarantee period of the annuity, the individual will not receive fair market value for the annuity based on the projected return. In this case, the annuity is not actuarially sound and a transfer of assets for less than fair market value has taken place, subjecting the individual to a penalty. The penalty is assessed based on a transfer of assets for less than fair market value that is considered to have occurred at the time the annuity was purchased.
For example, if a male at age 65 purchases a $10,000 annuity to be paid over the course of 10 years, his life expectancy according to the table is 14.96 years. Thus, the annuity is actuarially sound. However, if a male at age 80 purchases the same annuity for $10,000 to be paid over the course of 10 years, his life expectancy is only 6.98 years. Thus, a payout of the annuity for approximately 3 years is considered a transfer of assets for less than fair market value and that amount is subject to penalty.
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GENERAL AND CATEGORICAL
3258.9 (Cont.) ELIGIBILITY REQUIREMENTS 11-94
LIFE EXPECTANCY TABLE - MALES
Age Life Expectancy Age Life Expectancy Age Life Expectancy
0 71.80 40 35.05 80 6.98
1 71.53 41 34.15 81 6.59
2 70.58 42 33.26 82 6.21
3 69.62 43 32.37 83 5.85
4 68.65 44 31.49 84 5.51
5 67.67 45 30.61 85 5.19
6 66.69 46 29.74 86 4.89
7 65.71 47 28.88 87 4.61
8 64.73 48 28.02 88 4.34
9 63.74 49 27.17 89 4.09
10 62.75 50 26.32 90 3.86
11 61.76 51 25.48 91 3.64
12 60.78 52 24.65 92 3.43
13 59.79 53 23.82 93 3.24
14 58.82 54 23.01 94 3.06
15 57.85 55 22.21 95 2.90
16 56.91 56 21.43 96 2.74
17 55.97 57 20.66 97 2.60
18 55.05 58 19.90 98 2.47
19 54.13 59 19.15 99 2.34
20 53.21 60 18.42 100 2.22
21 52.29 61 17.70 101 2.11
22 51.38 62 16.99 102 1.99
23 50.46 63 16.30 103 1.89
24 49.55 64 15.62 104 1.78
25 48.63 65 14.96 105 1.68
26 47.72 66 14.32 106 1.59
27 46.80 67 13.70 107 1.50
28 45.88 68 13.09 108 1.41
29 44.97 69 12.50 109 1.33
30 44.06 70 11.92 110 1.25
31 43.15 71 11.35 111 1.17
32 42.24 72 10.80 112 1.10
33 41.33 73 10.27 113 1.02
34 40.23 74 9.27 114 0.96
35 39.52 75 9.24 115 0.89
36 38.62 76 8.76 116 0.83
37 37.73 77 8.29 117 0.77
38 36.83 78 7.83 118 0.71
39 35.94 79 7.40 119 0.66
3-3-109.17 Rev. 64
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GENERAL AND CATEGORICAL
11-94 ELIGIBILITY REQUIREMENTS 3258.9 (Cont.)
LIFE EXPECTANCY TABLE - FEMALES
Age Life Expectancy Age Life Expectancy Age Life Expectancy
0 78.79 40 40.61 80 9.11
1 78.42 41 39.66 81 8.58
2 77.48 42 38.72 82 8.06
3 76.51 43 37.78 83 7.56
4 75.54 44 36.85 84 7.08
5 74.56 45 35.92 85 6.63
6 73.57 46 35.00 86 6.20
7 72.59 47 34.08 87 5.79
8 71.60 48 33.17 88 5.41
9 70.61 49 32.27 89 5.05
10 69.62 50 31.37 90 4.71
11 68.63 51 30.48 91 4.40
12 67.64 52 29.60 92 4.11
13 66.65 53 28.72 93 3.84
14 65.67 54 27.86 94 3.59
15 64.68 55 27.00 95 3.36
16 63.71 56 26.15 96 3.16
17 62.74 57 25.31 97 2.97
18 61.77 58 24.48 98 2.80
19 60.80 59 23.67 99 2.64
20 59.83 60 22.86 100 2.48
21 58.86 61 22.06 101 2.34
22 57.89 62 21.27 102 2.20
23 56.92 63 20.49 103 2.06
24 55.95 64 19.72 104 1.93
25 54.98 65 18.96 105 1.81
26 54.02 66 18.21 106 1.69
27 53.05 67 17.48 107 1.58
28 52.08 68 16.76 108 1.48
29 51.12 69 16.04 109 1.38
30 50.15 70 15.35 110 1.28
31 49.19 71 14.66 111 1.19
32 48.23 72 13.99 112 1.10
33 47.27 73 13.33 113 1.02
34 46.31 74 12.68 114 0.96
35 45.35 75 12.05 115 0.89
36 44.40 76 11.43 116 0.83
37 43.45 77 10.83 117 0.77
38 42.50 78 10.24 118 0.71
39 41.55 79 9.67 119 0.66
Rev. 64 3-3-109.18
