Medicaid Annuity

A Medicaid annuity is simply a term describing the use of an immediate annuity to protect assets against expected costs of nursing homes and healthcare charges.

Medicaid won’t pay for nursing home care for individuals with assets over certain thresholds.   Thus, many individuals transfer all of their wealth to a third party insurance company to purchase a Medicaid friendly annuity.  This turns assets into guaranteed cash flow, and keeps the individual eligible for Medicaid benefits.

While some states disapprove and prevent this technique through look back clauses that identify spend down strategies, most states allow the Medicaid annuity. The basic requirements are:

  1. The annuity must be irrevocable
  2. Non-Transferable
  3. Actuarialy Sound
  4. Include payments over the lifetime of the annuitant without balloon payments.

For  many individuals, the cost of nursing home care can be devastating over a very short period of time. In the absence of long term care insurance, many individuals in the past have been advised to impoverish themselves to qualify for Medicaid assistance. This can leave the remaining spouse with financial difficulties in the future.

Medicaid annuities vary greatly state by state.  We can assist by connecting you to a specialized planning and professionals in this field.