What is a Medicaid Annuity?

Doctor Talking to a Patient

Nurse helping an elderly man

What Is a Medicaid "Spend Down"? 

We see a common problem for many seniors as they age: They end up requiring long-term nursing or assisted living care but cannot afford to pay for it. Although applying for Medicaid is a great solution, many find that they do not qualify for the joint federal-state program because they have too much income and/or assets. As a result, many try a Medicaid "spend down" their assets in order to meet the income requirements. 

 A Medicaid spend-down strategy requires that you spend enough of your cash to be eligible for the program. While this is a way to qualify and get your health care paid for, it is often not a great idea because you can become too cash-poor to live on. 

Consider this situation:

  • Your father needs Medicaid to pay for a nursing home but your mother is in good health. You drain their savings accounts so your father becomes eligible, but now your mom has even less assets on which to live.

This is why some people use a Medicaid-compliant annuity instead.

What Is a Medicaid Annuity?

An annuity is a fixed amount that is paid out each year for the rest of an individual's lifetime. You provide the insurance company with a lump sum in exchange for a guaranteed income stream. 

Medicaid-compliant annuities are paid out immediately and provide yearly income to help a spouse maintain his/her qualify of life if they do not require nursing home care. These types of annuities are an excellent solution for couples with one spouse who requires nursing care while the other is still in great health.

Call to Learn More About Medicaid Strategies

Annuities can be complex and are not a DIY matter. An elder law attorney can explain more about the process and how to navigate the various details, such as tax implications.

Learn more about Medicaid and how to meet the requirements by contacting one of our elder law attorneys today for a consultation.

Reference: U.S. News and World Report (May 29, 2019) “What Is a Medicaid Annuity?”
Related Posts
  • Can I Be Enrolled in Medicaid and Medicare at the Same Time? Read More
  • How the Medicaid Spend Down Works Read More
  • Most Common Questions About Medicaid Read More