E-4400, Other Annuities, Pensions and Retirement Plans

Revision 15-3; Effective September 1, 2015

There are two types of annuities:

  • An annuity can be a periodic payment calculated on an annual basis that is a return on prior service. A civil service payment is an example of this type of annuity. It is treated the same as pension or retirement income.

    Example: A person retired from federal service in 1980 after 30 years of employment. Her gross annual Civil Service Annuity (CSA) payment is $5,400, which is paid in 12 monthly installments of $450 each. Because this type of annuity produces a stream of income only, it has no resource value. The monthly payment is countable income.
  • An annuity can also be a contract or agreement for an amount to be paid yearly or at other regular intervals in return for prior payments made by the person. For this type of annuity, the language of the annuity dictates whether disbursements are countable income and describes the payment schedule. See Section F-7000, Annuities, for treatment of pre-DRA and post-DRA annuities.

Pension or retirement payments may be made directly by a former employer or from a fund, insurance or any similar source. An example of a retirement payment is teacher retirement.

Determine the gross and net amounts of the monthly payments. Also determine whether the organization making the payments is providing any other benefits to the person.

Note: When income tax is withheld from retirement, pension or disability benefits, use the gross income amount for the eligibility and co-payment calculations.

See Chapter G, Eligibility Budgets, and Chapter H, Co-Payment.

See Appendix XVI, Documentation and Verification Guide.

Certain pension and retirement payments allow for the person to request a reduced amount. If the reduction is irrevocable, accept the reduced amount in determining the person's eligibility. However, for a person in an institutional setting (for example, a nursing facility or a Home and Community-Based Services waiver program), investigate the reduction for transfer of assets in Chapter I, Transfer of Assets.

If the person is receiving a reduced benefit, ask the person to provide a written statement from an official of the organization addressing the amount of the original benefit, the amount of the reduced benefit, the date of the reduction, and information about the revocability or irrevocability of the reduction.

If the pension or retirement payments are revocable, the person must apply for maximum entitlements.

Reference: Section I-1400, Transfer of Income

If a person’s income from annuities, pensions and retirement plans is greater than the special income limit, but not enough to pay private-pay costs in an institutional setting, the person can consider a QIT. QITs allow people to legally divert their income into a trust, after which the income is not counted for eligibility purposes. For more information, see Appendix XXXVI, Qualified Income Trusts (QITs) and Medicaid for the Elderly and People with Disabilities (MEPD) Information. The payments are countable in the co-payment budget.