Link to Chapter 25 of the Alabama Medicaid Administrative Code (560-X-25):

https://medicaid.alabama.gov/documents/9.0_Resources/9.2_Administrative_Code/9.2_

Adm_Code_Chap_25_Eligibility_7-15-23.pdf

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Rule No. 560-X-25-.09. Transfer of Assets Affecting Eligibility.

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Information regarding life expectancy – Alabama uses the federal social security life

expectancy table.

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(2) When a stream of income or the right to a stream of income, such as an annuity, is
transferred, Medicaid shall make a determination of the total amount of income expected to be transferred during the owner’s life, based on an actuarial projection of the owner’s life expectancy as established by federal life expectancy tables, and calculate a penalty period based on the projected total income.

Information regarding treatment of annuities in Alabama.

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(9) Definitions. As used in this rule:

(g) "Assets"  are all income or resources of the individual or the individual's spouse. This

term includes income or resources which the individual or individual's spouse is or was entitled to but does not receive. With respect to transfer of assets, the term "assets";

also includes the following:

1. An annuity purchased by or on behalf of the individual and will be treated as a

disposal of assets for less than fair market value unless:

(i) the annuity is—

(I) an annuity described in subsection (b) or (q) of § 408 of the Internal

Revenue Code of 1986; or

(II) purchased with proceeds from—

I. an account or trust described in subsection (a), (c), (p) of §

408 of such Code;

II. a simplified employee pension (within the meaning of §

408(k) of such Code); or

III. a Roth IRA described in § 408A of such Code; or (ii) the

annuity—

(I) is irrevocable and non-assignable;

(II) is actuarially sound (as determined in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration); and

(III) provides for payments in equal amounts during the term of the annuity, with no deferral and no balloonpayments made; and,

(iii) in the annuity—

 
(I) the State is named as the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant; or

(II) the State is named as such beneficiary in the second position after the community spouse or minor or disabled child and is named in the first position if such spouse or a

representative of such child disposes of any such remainder for less than fair market value

 

In Alabama, retirement accounts are countable assets for both the applicant and the community spouse.



The “name on the check” rule, allowing an applicant to transfer their IRA assets over to their spouse by setting up a tax qualified Medicaid compliant annuity in the applicant’s name payable to their spouse, is not accepted in Alabama.