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Make Sure Your Annuity is “Medicaid Compliant”


The cost of long term care can be upwards of $100,000 a year and many Americans have not planned ahead by purchasing long term care insurance.  This information comes from the Pittsburgh Post-Gazette’s article “Elder Law: Annuity valuable option in a crisis,” by Julian Gray and Frank Petrich.  If you don’t have that insurance, you will likely have to spend down all of your money to near poverty levels in order to receive Medicaid benefits for long term care in nursing home facilities.  But there is another way to become eligible for Medicaid assistance.  Purchasing a Medicaid compliant annuity makes those funds exempt from being counted towards your Medicaid eligibility.

Immediate annuities can shelter your financial resources so that the spouse of someone in long term care still has money off which they can live.  By following the proper protocol and ensuring that your annuity purchase is Medicaid compliant, your countable or non-exempt money will become noncountable or exempt.  There have been many lawsuits both federally and in Pennsylvania regarding the correct way to convert countable money to noncountable, so it is crucial to find a legal and financial expert to help you with this annuity purchase.

The Deficit Reduction Act of 2005 made it easier to determine the annuity rules in this particular situation, but everything was not clarified and questions remained.  The criteria are very specific for using immediate annuities to make your money exempt, and you must make sure that your particular annuity meets each and every criteria.  But having this option has saved many elderly people from living at the poverty line as they pay for their spouse to be cared for in a long term care facility.  This is an option so that they don’t have to spend down all of their money in order to qualify for Medicaid coverage.  This annuity purchase isn’t right for everyone, but many elderly people facing financial crises can be helped with an annuity.

Written by Rachel Summit

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