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How To Effectively Use Annuities In Medicaid Planning

If you or a loved one needs long-term care in a nursing home, but simply own too much to qualify for Medicaid, there may be a solution to your problem: Purchase a “Medicaid-friendly” annuity. Indeed, the best part about buying the right annuity is that it will not count as part of your assets for the purpose of determining your Medicaid eligibility ― meaning the annuity can help you reach the Medicaid income limits while avoiding any potential transfer penalty.

The Hughes Law Firm, P.C., help people throughout Colorado with issues of elder law and estate planning. From our office locations in Denver, Fort Collins and elsewhere throughout the state, you are never far from experienced legal help with Medicaid annuity planning.

However, even though an annuity can certainly be an effective Medicaid planning tool, it is important to remember that not every type of annuity will work when dealing with Medicaid. For instance, if you wish to lower your asset pool and steer clear of transfer penalties, only an immediate irrevocable annuity that meets three specific criteria will get the job done:

  • The annuity must be nonassignable and irrevocable.
  • The annuity must name the state as the death beneficiary, at least up to an amount equal to the Medicaid benefits paid.
  • The annuity must be purchased from a company that normally sells annuities as part of its business.

Also, if the annuity is being paid to the Medicaid recipient, then:

  • The annuity must be “actuarially sound,” meaning it is expected to pay out completely during the recipient’s life expectancy which is determined by the proper life expectancy table issued by the Social Security Administration.
  • The annuity must make substantially equal periodic payments OR the annuity is a qualified individual retirement annuity or purchased from a qualified individual retirement plan.

When done correctly, an annuity can be one of the best ways to become eligible for Medicaid sooner while simultaneously ensuring you have the money you need to cover your health care expenses should you have a penalty period. Alternatively, an annuity can also help make sure the spouse of a Medicaid recipient has the income he or she needs to meet basic needs. No matter your situation, however, you should contact the attorneys at The Hughes Law Firm as soon as possible to learn what options and legal strategies are best for you and your family.

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Contact us today for a free 20-minute phone consult with one of our knowledgeable lawyers. You can reach us online or call us at (303) 758-0680. With several office locations throughout Colorado, we can help you no matter where you live. Get the legal representation you deserve.

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