855.471.6771
Medicaid Annuity Solutions
  • Home
  • Medicaid Annuities
  • Funeral Trusts
  • About Us
  • Blog
  • Careers
  • Agent Log In

How to Use a Medicaid Annuity to Shelter Assets and Qualify for Medicaid

5/15/2015

1 Comment

 
What are Medicaid Qualified Annuities?

This type of annuity is used when an individual needs to qualify for Medicaid but has resources over and above the limits permitted by Medicaid guidelines.

Medicaid Qualified Annuities are an essential tool for Medicaid planning, they take excess countable resources and convert them to a stream of income. The income is then passed to the spouse of the individual in the nursing home supplementing their income and preserving the family assets or in the case of a single individual, it can be used to fund the nursing home at a reduced “Medicaid rate” [which is usually up to 55% less than private pay rates] which will allow the funds to last longer. The individual can also “gift” a portion of their resources and use the rest to fund the nursing home temporarily during the “penalty period”. See below and our webpage for more detailed examples.

Medicaid annuities are funded with a single payment, they are immediate annuities, meaning they begin paying an income immediately or within 2 months and they are structured to meet the guidelines set by the Deficit Reduction Act of 2005 section 6012. They are available only through a select few insurance companies and are generally used as Individual and Community Spouse Medicaid Qualified Annuities.

What is the Deficit Reduction Act [DRA]?

The DRA was signed on Feb. 08, 2006 and in part, established new guidelines for Medicaid including the eligibility criteria. Section 6012 particularly refers to the evaluation and treatment of annuities as related to eligibility. It states that in order to not be treated as a transfer, the annuities must meet certain guidelines as stated below;

1. The annuity must be irrevocable and non-assignable


2. The annuity must be actuarially sound, meaning the payment schedule must not exceed the life         
     expectancy of the annuitant [person receiving the payments].

3. The annuity must provide payments in approximately equal amounts with no deferred or balloon 
    payments.

4. The state agency must be named ass remainder beneficiary;
             a. Under the DRA the annuity must name the state as the beneficiary in the first position [from 
                 this, they will recoup the dollar amount of Medicaid benefits paid to the individual only]. 
                 Unless there is a community spouse and/or a minor or disabled child.

             b.  If there is a community spouse and/or a minor or disabled child, the state may be named in 
                  the 2nd position after those individuals.


What are the benefits of a Medicaid Qualified Annuity?

1. Reduce or eliminate the high cost nursing home care with quicker Medicaid qualification.

2. Converting excess countable resources to a non-countable income stream for the community 
    spouse will accomplishing 2 goals;

       a. Preserve assets and prevent them from being used for the high cost of nursing home care.
       b. Prevent the community spouse from having insufficient income to pay for daily needs and  
           expenses.

3. A single individual can purchase a Medicaid annuity and convert excess resources to an income 
    stream, immediately qualifying for Medicaid. Then use the income to fund their nursing home 
    costs at a reduced Medicaid rate [up to 55% less than private pay]. Their funds will then last 
    longer and there’s a potential to pass along the excess to their beneficiaries.

4. Asset protection for a single individual. The annuity will shelter assets and allow you to pass them
    to a family member. Example - "gifting" a portion of excess resources to a family member [this 
    will trigger a penalty based on the amount gifted], use the remaining [after calculating how much
    is be needed to properly fund penalty period] to purchase an annuity which will pay the nursing
    home during the penalty period. The assets are sheltered and once the penalty period is over the   
    individual will immediately qualify for Medicaid, which will pay the full amount of nursing home costs.

Please note:  The above examples have been simplified to save space.  Click to view more detailed examples of techniques used to save tens or even hundreds of thousands of dollars and help financially qualify the individual for Medicaid.

For more information please visit our website…. www.mymedicaidannuity.com

1 Comment

    Medicaid Annuity Solutions

    Dedicated to providing attorneys with solutions to       their clients needs in qualifying for Medicaid. 

    Archives

    May 2015

    View my profile on LinkedIn

    Categories

    All
    1035 Exchange
    529A Plan
    Disabilities
    Don't Go Broke In A Nursing Home
    Elder Law
    Estate Planning
    Funeral Trusts
    Immediate Annuity
    Medicaid Eligibility
    Medicaid Gifting Rules
    Medicaid MMNA
    Medicaid Planning
    Sheltering Assets From A Nursing Home
    Special Needs Planning

    RSS Feed

Providing Nationwide Service 
to Law Firms

PH:  855.471.6771
Contact Us

Physical Offices located in Pennsylvania and New jersey

Please note the information contained within 
this site is for information purposes and should not be construed as legal advice. Please see our disclaimer HERE

               Links
                Attorney Resources

               Employment Opportunities