Valuation of Non-Compliant Annuities
Helping your Clients Deal with Existing Annuities
It is common for seniors applying for Medicaid to own an existing annuity that will make them ineligible for benefits. In these cases, we will review your client’s contract and find a solution that fits their needs.
1Provide a copy of the client’s annuity contract via e-mail or our online quote request tool.
2Upon receiving the necessary information, we will provide you multiple offer letters from secondary market buyers, typically within one business day.
3When your client is ready to proceed, inform us of the offer they choose to accept.
4We will provide the necessary documentation to initiate and complete the sale of the annuity.
5Upon processing all required documentation, the client will receive a check for the sale. The time from valuation to sale can be completed in as little as 1-3 weeks.
There is no fee for this service. Our review of your client’s contract and our assistance with its sale is completely complimentary. If your client’s contract does not have any value on the secondary market, and you are seeking refusal letters, a small fee would be due. For more information on this product, visit our “Refusal Letters” page.
If your client owns a deferred annuity (an annuity that is not making regular payments), they have several options available. The annuity can be liquidated, or, assuming the client is seeking Medicaid benefits, it can be transferred via 1035 Tax-Free Exchange to a Medicaid Compliant Annuity. For more information on how to handle deferred annuities in crisis planning, contact our office.
If your client owns an annuity that is not Medicaid compliant and cannot be sold on the secondary market, we will connect you with a Benefits Planner. These annuities are typically treated as uncompensated transfers and result in a penalty period of Medicaid ineligibility. Our office can help you determine your options for proceeding with Medicaid planning.
Annuities funded with IRA funds typically cannot be sold on the secondary market. Luckily, the Deficit Reduction Act of 2005 gave preferential treatment to annuities funded with tax-qualified funds, meaning the annuity might not prevent your client from qualifying for benefits, even if it seems to be non-compliant. For an analysis of your client’s policy, contact our office.
Q: How do I know if my client’s contract can be sold?
A: Simply provide us a copy of the contract and we will advise accordingly. A few items we look for include the contract being revocable and assignable. Additionally, it cannot be a “lifetime” payout annuity, meaning payments are made only during the life of the annuitant. Life annuities with a guaranteed period certain could still qualify.
Q: Who purchases the contract?
A: We work with a variety of reputable financial institutions that specialize in the valuation and sale of annuities on the secondary market. You and your client will have the opportunity to review several offers from different companies before making a decision.