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
Read more: What is Elder Law and Do You Need an Elder Care Attorney?
Related terms
- Medicaid planningMedicaid planning is the legal arrangement of income and assets so a person can meet Medicaid rules for long-term care.
- Look-back periodThe look-back period is the time window Medicaid reviews when someone applies for long-term care coverage.
- Medicaid asset limitThe Medicaid asset limit is the cap on countable assets a person may own and still qualify for Medicaid long-term care.
- 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.
- Elder law attorneyAn elder law attorney is a lawyer who focuses on legal issues of older adults.
- Spend downSpend down is a way to qualify for Medicaid when your income is above the state limit.
