Medicaid: How To Plan Ahead For Long Term Care Coverage

A purchase of an annuity is considered to be a transfer for full and adequate consideration, The amount paid for the annuity does not count toward total countable assets for Medicaid purposes. (While that is the case, the income from the annuity is considered to be countable income). 

Medicaid Annuities have strict requirements. For instance, an annuity can only be used for these purposes if each of the following is present:

• The annuity names the state as the first remainder beneficiary or the second remainder beneficiary up to the amount the state has paid in benefits - after a community spouse or minor or disabled child.
• The annuity is irrevocable and not assignable.
• The annuity is actuarially sound. Actuarially sound is determined in accordance with actuarial publications of the Office of the Chief Actuary of the Social Security Administration.
• The annuity provides for equal payments during the term with no deferral or balloon payment.

These provisions do not apply to annuitizing a qualified retirement plan, a traditional IRA or a Roth IRA.

If you go into a nursing home and have a spouse, the stay-at-home spouse (known in Medicaid-speak as the "Community Spouse") can buy a special type of irrevocable immediate annuity.According to Kiplinger's Retirement Report, buying the annuity is not considered to be a transfer for purposes of Medicaid eligibility. For example, if a couple has $200,000 and the husband goes into a nursing home. The wife could purchase a $100,000 annuity while her husband becomes eligible for Medicaid. (She can keep the other $100,000).

To find a Medicaid Annuity, speak with a local insurance broker or go on line. One of the online sites to consider is LongTermCareLink.net . (Click on Links.  Then on Insurance Products. Search for Medicaid annuity.)

BEFORE PURCHASING AN ANNUITY FOR THE SUBJECT PURPOSE: check with a lawyer to be sure the policy fits the Medicaid requirements.

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