PLEASE NOTE: Casey & Lundregan, P.C. is committed to providing our clients with timely updates, reliable resources, and a safe environment to conduct necessary meetings during the COVID-19 (coronavirus) pandemic. We are offering our clients the ability to meet with us via telephone or through video conferencing. Please call our office to discuss your options and visit our Blog for updates and information.

What is a Medicaid Compliant Annuity, and how can it help me?

| May 27, 2021 | Estate Planning |

Medicaid is sometimes a frustrating topic for people who have a significant number of assets. The last thing you want to have to do is to spend down your assets to qualify. Spending down your assets means that there will be fewer to pass on to your loved ones after your death.

Medicaid funds are designated to help those who need nursing home care, but they require such a significant spend down that spouses of those in nursing homes could be left feeling like they have nothing left.

A Medicaid Compliant Annuity may help. This is sometimes also called a Medicaid Qualified Annuity and is one option that allows you to protect assets that belong to the spouse of the person going into a nursing home.

What are Medicaid Compliant Annuities?

Medicaid Compliant Annuity takes assets that are “countable” for the purposes of qualifying for Medicaid and converts them into “uncountable” assets. The assets are converted into an annuity with the goal of providing an income to the spouse of the person who needs Medicaid.

This annuity, which is a fixed sum of money, is an immediate annuity. That means that immediate, consistent payments will be paid to the spouse with taxes deferred. The immediate annuity is a simple contract purchased through an insurance company specifically to provide for the community spouse.

What has to happen to make an annuity Medicaid compliant?

To make it Medicaid compliant, it should be:

  • Irrevocable
  • Set to benefit the community spouse now but revert back to the spouse in nursing care if the community spouse dies
  • Provide equal, regular payments
  • Set up to pay the investment back within their lifetime(or within a shorter timeframe)

This is a complex annuity to set up, and it’s important that one you choose will meet all the right requirements to help you protect your assets and also qualify for Medicaid. It’s necessary to find an attorney you trust and who has specialized in this area when you begin estate planning, because a solid estate plan can make a world of difference in your life today and in your loved ones’ lives when you pass.

FindLaw Network