---
title: "What Is Annuity for Medicaid planning? Home Care Glossary"
description: "An annuity for Medicaid planning is a contract in which a person pays a lump sum to an insurer in return for a stream of income. It may convert countable..."
url: https://homecare.preview.multisites.ai/glossary/annuity-for-medicaid-planning/
publisher: HomeCare.com
phone: 800-974-3458
start: https://care.homecare.com/?source=homecare.com
---

Paying for care

# Annuity for Medicaid planning

An annuity for Medicaid planning is a contract in which a person pays a lump sum to an insurer in return for a stream of income. It may convert countable assets into income. Federal rules for annuities apply to Medicaid applicants. States review them closely, and mistakes can cause a penalty.

## Why it matters for your family

An immediate annuity pays a set monthly amount in return for a single payment. The Administration for Community Living warns that an annuity can affect Medicaid eligibility and whether Medicaid pays for long-term care. Federal guidance requires states to review annuity purchases under the transfer rules. Some states require the state to be named as a remainder beneficiary. A common mistake is to buy an annuity from a salesperson before checking state Medicaid rules. Talk with an elder law attorney first. The attorney can tell you how the state treats the contract. Do not rely on a sales pitch.

Source: [acl.gov](https://acl.gov/ltc/costs-and-who-pays/paying-privately/annuities)

[Read more: What is Elder Law and Do You Need an Elder Care Attorney?](https://homecare.preview.multisites.ai/paying-for-care/elder-law-attorney/)

## Related terms

-   [**Medicaid planning**Medicaid planning is the legal arrangement of income and assets so a person can meet Medicaid rules for long-term care.](https://homecare.preview.multisites.ai/glossary/medicaid-planning/)
-   [**Look-back period**The look-back period is the time window Medicaid reviews when someone applies for long-term care coverage.](https://homecare.preview.multisites.ai/glossary/look-back-period/)
-   [**Medicaid asset limit**The Medicaid asset limit is the cap on countable assets a person may own and still qualify for Medicaid long-term care.](https://homecare.preview.multisites.ai/glossary/medicaid-asset-limit/)
-   [**Income cap trust (Miller trust)**An income cap trust, also called a Miller trust or income-only trust, holds part of a person's monthly income so the person can meet a state's Medicaid income limit for long-term care.](https://homecare.preview.multisites.ai/glossary/income-cap-trust/)
-   [**Elder law attorney**An elder law attorney is a lawyer who focuses on legal issues of older adults.](https://homecare.preview.multisites.ai/glossary/elder-law-attorney/)
-   [**Spend down**Spend down is a way to qualify for Medicaid when your income is above the state limit.](https://homecare.preview.multisites.ai/glossary/spend-down/)

[All glossary terms](https://homecare.preview.multisites.ai/glossary/)

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