Advanced Underwriting Consultants

Question of the Day – December 3

Ask the Experts!

Here’s the question of the day.

Question:  What is a Medicaid compliant annuity and how is it used?

Answer:   A Medicaid compliant annuity is an immediate annuity that cannot be assigned, transferred or turned into a lump sum.  There are other requirements that may be imposed by federal or state law.

Individuals or couples who have countable assets worth too much will not qualify for Medicaid.  Medicaid is a needs-based federal program, administered by the states, which will pay for long term care costs.

The federal rules permit an individual or married couple turn a countable asset into an income stream.  While a substantial countable asset will prevent someone from qualifying for Medicaid until it is depleted, an income stream usually will not.  So the process of buying a Medicaid compliant annuity can speed up the Medicaid qualification process.

For a married couple, if the income is paid to the healthy spouse, she may be able to keep all of it—while the sick spouse gets Medicaid benefits.

For a single person, the income must generally be turned over to the government agency administering the Medicaid program.  However, the single person will be able to qualify for benefits immediately.  If she leaves the Medicaid facility, she may be able to keep future income.

Each state has its own rules about Medicaid compliant annuities.  Consult a local elder law attorney before trying this or any other Medicaid planning technique.

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