Medicaid Compliant Annuities for Immediate or Sudden Long-Term Care Planninglong-term-side

Due to a lack of planning, many individuals end up in long-term care situation and are faced with having to spend-down their savings before they can qualify for Medicaid. This will often deplete the savings and limit the income of the healthy or surviving spouse. However, there may be relief available using a Medicaid Compliant Immediate Annuity. The goal is to qualify the institutionalized spouse for immediate Medicaid eligibility in order to pay for long-term care, while  providing the spouse with sufficient income and resources to maintain his or her lifestyle.

These special annuities are available due to the Omnibus Budget Reconciliation Act (OBRA) of 1993. However, the following restrictions must be in place on the annuity in order to qualify for Medicaid.

  • Nontransferable. Nonforfeitable. Nonassignable. Noncommutable. Irrevocable.
  • No Change of Payee
  • No Change of Payment Option
  • The Contract has No Cash Value
  • Right to Return the Contract (within 10 days of receipt)

Example of a Medicaid Annuity at Work:

  1. Mary (age 77) and Ben (age 80) have $400,000 in countable assets. Ben ends up in a nursing home…
    Now they either have the option to spend down all their assets to qualify for Medicaid or they can take a protion of those assets and put it into an immediate annuity that is medicaid compliant. This will give Mary around $4,000 of monthly income for 6 years. Ben is now able to qualify for Medicaid to pay for the nursing home.

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