Medicaid-Compliant Annuities

When it’s time to put together a long-term care plan, many seniors take the opportunity to restructure their finances.

Annuities are a common asset people have that acts as a source of income for them. There are many different types of annuities, some of which can get in the way of Medicaid eligibility and other benefits seniors depend on to pay for their care.

Kabb Law is a Beachwood, OH, elder law firm that can help you understand these investments, how they fit into an ideal care plan and how to find Medicaid-compliant annuities that you can keep into retirement and beyond.

What is an Annuity?

There are many different kinds of annuities, but at their most basic, an annuity is a type of investment where you gave a sum of money to an insurance company in exchange for regular payments. In effect, you’re loaning some of your money to an insurance company in exchange for steady income. Some annuities are for a fixed term, while others are for life. Some may be sold or transferred, while others are fixed. Qualified annuities are funded with money you haven’t paid taxes on yet, and they tend not to be taxable until they’re cashed out, while non-qualified annuities are funded with your after-tax earnings. Depending on how they’re structured, annuities may be examined by Medicaid when you sign up for the program.

How Does Medicaid Treat Annuities?

The state of Ohio allows you to get Medicaid coverage if your assets are together worth less than $2,000. Medicaid considers annuities to be assets you own, and most types get counted against your maximum asset threshold. There are exceptions, however, and an experienced Ohio elder law team can help you to find them.

Medicaid-Compliant Annuities

To keep your annuity while you’re on Medicaid, the asset has to meet certain criteria. As a rule, it must be:

  • Non-transferable, so it’s in your name only and not able to be given to someone else
  • Fixed, rather than variable, which could pay a set amount  over time
  • Scheduled to last no longer than your lifetime as set by the statute
  • Set up to pay the state of Ohio when you pass, as a way of paying back some of the benefits you used.

Not all of these requirements are set in stone. For example, you can sometimes list your surviving spouse as a first beneficiary, rather than the state, so that the Medicaid annuities you hold pass intact to your widowed spouse.

Knowing which of your investments are Medicaid-compliant annuities can be tough. In fact, it is likely that it is not.  Also, creating a Medicaid compliant annuity can be detrimental.

That’s why it’s a good idea to work with experienced elder law and estate planning lawyers before you start making financial adjustments in preparation for your admission to a care facility.

Kabb Law, an elder law firm in northeastern Ohio, has decades of experience helping seniors choose Medicaid annuities and help ensure you’re covered all the way through.