Annuities and Medicaid
Costs associated with long-term care can be devastating. In many cases, individuals
without long-term care insurance may be dependent on Medicaid for assistance. To
qualify for Medicaid, you must first "spend down" virtually all of your assets.
There are, however, statutory shelters that allow you to maintain certain assets.
Among these are annuity contracts that are deemed by the law to be "Medicaid friendly."
To qualify as a "Medicaid friendly" annuity, these requirements generally must be
met:
- The annuity must begin distributing income immediately.
- The annuity contract must be irrevocable.
- The contract must be set up under an irrevocable, non-assignable settlement option.
- Income payout from the annuity must be constant (the annuity may not be a balloon
annuity, with small current income distributions, and greater ones at a later time.)
- The state must be named as a beneficiary.
If the annuity meets the above requirements, it will generally be counted as income,
rather than as an asset. The effect of this is as follows:
- Less assets "available" to spend on nursing home expenses.
- Assuming the income distribution from the annuity is at or below a statutorily defined
dollar amount, the income received need not be spent down. (Any excess above the
statutory cap amount, however, must be spent down.)
- The amount maintained within the annuity contract (the principal) is not subject
to Medicaid spend-down. It may be kept and passed on to future generations.
This Web site is intended for general information purposes only. It does not nor is it intended to constitute legal, tax or investment advice. United Financial Systems, Corporation is not a lawyer, registered investment advisor or investment advisor representative, and is not engaged in the practice of law or the business of investment advice.