(a) As a result of providing medical assistance for home and facility care to an individual, the state shall, by operation of law, become a remainder beneficiary, to the extent required by Section 1917(e) of the federal Social Security Act (42 U.S.C. Sec. 1396p(e)), of annuities purchased in whole or in part by the individual or his or her spouse in which the individual or his or her spouse is an annuitant, except as provided in Section 14009.7, unless the individual or his or her spouse notifies the department in writing that he or she prohibits the state from acquiring a remainder interest in his or her annuity, in which case subdivision (d) shall apply.
(b) This section shall only apply to the following annuities:
(1) Those purchased on or after February 8, 2006.
(2) Those purchased before February 8, 2006, and subjected to a transaction that occurred on or after February 8, 2006.
(A) For the purposes of this paragraph, “transaction” includes, but is not limited to, any action taken by the individual or his or her spouse that changes the course of payments to be made by the annuity or the treatment of the income or principal of the annuity.
(B) For the purpose of this paragraph, “transaction” shall not include any of the following:
(i) Routine changes and automatic events that do not require any action or decision on or after February 8, 2006.
(ii) Changes that occur based on the terms of the annuity that existed prior to February 8, 2006, and that do not require a decision, election, or action to take effect.
(iii) Changes that are beyond the control of the individual or the individual’s spouse.
(c) Any provision in any annuity subject to this section that has the effect of restricting the right of the state to become a remainder beneficiary is void.
(d) If an individual or his or her spouse notifies the department in writing that he or she prohibits the state from acquiring a remainder interest in his or her annuity, the purchase of the annuity shall be treated as the transfer of an asset for less than fair market value that is subject to Section 14015.
(e) (1) When the state becomes aware of an annuity in which it has acquired a remainder interest, the department shall notify the issuer of the annuity of the state’s acquisition of its remainder beneficiary interest.
(2) The issuer of the annuity shall, upon notification by the department, immediately inform the department of the amount of income and principal being withdrawn from the annuity as of the date of the individual’s disclosure of the annuity.
(3) The issuer of the annuity shall, upon request by the department or any agent of the department, immediately disclose to the department the amount of income and principal being withdrawn from the annuity.
(4) The issuer of the annuity shall immediately notify the department if there is any change in either of the following:
(A) The amount of income or principal being withdrawn from that annuity.
(B) The named beneficiaries of the annuity.
(f) Any moneys received by the state pursuant to this section shall be deposited into the General Fund.
(g) This section shall be implemented pursuant to the requirements of Title XIX of the federal Social Security Act (42 U.S.C. Sec. 1396 et seq.) and any regulations adopted pursuant to that act, and only to the extent that federal financial participation is available.
(h) To the extent that regulations are necessary to implement this section, the department shall promulgate regulations using the nonemergency regulatory process described in Article 5 (commencing with Section 11346) of Chapter 3.5 of Part 1 of Division 3 of the Government Code.
(i) It is the intent of the Legislature that the provisions of this section shall apply prospectively to any individual to whom the act applies commencing from the date regulations adopted pursuant to this act are filed with the Secretary of State.
(Added by Stats. 2008, Ch. 379, Sec. 6. Effective January 1, 2009.)
Last modified: October 25, 2018