How to Buy a Medicaid-qualified Annuity

If you or your spouse qualify for Medicaid, purchasing a Medicaid-qualified annuity could be an excellent way to protect your assets and ensure you are using your resources appropriately. These are specifically catered to spouses of nursing home residents.

Annuities are when a buyer pays a lump sum of money in exchange for equal monthly payments over several years. In a Mediciaid-qualified annuity, the excess resources of a couple are divided into equal payments that are meant to supply the spouse not in the nursing home with income. This is a method of smart financial planning that will provide one spouse income while the other spouse is in nursing care, ensuring that they have steady income.

There are factors to consider when purchasing a Medicaid-qualified annuity, such as the spouse’s life expectancy. If a spouse outlives the annuity payout period, none of the annuity funds will go to pay the spouse’s Medicaid costs. Additionally, a Medicaid-qualified annuity is irrevocable, meaning you can’t take the funds out except for the equal monthly payments. In most cases, the state must be named the remainder beneficiary in the amount of Medicaid paid on the annuitant’s behalf.

In most states, the purchase of an annuity is not seen as a transfer for Medicaid eligibility, but instead is an investment in the spouse’s future. When you purchase an annuity, it transforms a countable asset into a non-countable income stream, making it a smart tool for estate planning when applying for Medicaid. These annuities are geared toward couples, and would be less beneficial to a single individual.

The lawyers at Mortellaro Law are experts in elder law, and can provide comprehensive analysis on your financial situation. Ensure you’re making the best decisions for you and your spouse when it comes to estate planning.