A Medicaid professional consultant helping an elderly woman to protect her assets and money from the nursing home spend down.

Medicaid Compliant Annuity Payments, Medicaid Annuity Companies

With Medicaid compliant annuities there is no right to revoke

When a Medicaid applicant purchases a Medicaid compliant annuity, they do not have any right to revoke the contract. This means that the client cannot obtain any type of refund for the annuity. Most clients will be advised to waive the rights to any policy in which the policyholder could have the right to reject the contract. Some states will require that the annuity be un-assignable and non-transferable. This means that the Medicaid applicant would not have the power to change the owner, the beneficiary, the benefit period or sell the policy. There are very Medicaid compliant annuity companies that will meet these conditions and very few agents will have the legal skills and knowledge to understand what the required qualifications are. Medicaid Annuities – Level Monthly Payment, Level Annual Payment, Balloon Payment At one time, there were three different payouts that would qualify as non-countable under the rules of Medicaid. These included level monthly payment, level annual payment and a balloon payment. In most states, the Medicaid compliant annuity must also pay out in equal payments. What this means is that for level monthly payouts or level annual payouts, the payments must meet the requirements and be made in equal portions for the length of time that is determined on the life expectancy of the client.

Example of a Medicaid compliant annuity (i.e. Medicaid friendly annuity) to qualify for Medicaid

For example, Mr. Jones, aged 65, has $75,000 in cash and his home. Before he applied for Medicaid, he funded $75,000 into an annuity that was compliant, allowing him to qualify. Let's assume that Medicaid will pay for his care at a rate of $3,000 a month and Mr. Jones receives $500 each month from Social Security. If he did not have the annuity, he would not have qualified for Medicaid. He would have had to pay for his own care and deplete the amount of assets he had. When the amount was depleted, he would then qualify and Medicaid would only pay $2,500 each month, which is $3,000 less the amount he receives from Social Security.

Since he bought the annuity, he immediately qualifies for assistance. However, without the Medicaid compliant annuity and with death in five years, the recovery amount for the state would be $108,750. After five years with the annuity, Mr. Jones would qualify for the $1,000 monthly shortfall allowance. With the annuity, after his death, there will still be payments from the annuity that would go to the state for reimbursement for his care.

In both cases, Mr. Jones will be required to spend his $75,000, but by purchasing a Medicaid compliant annuity, he ended up saving a lot of his money. He also got the Medicaid coverage he needed at the time and owed no money to the state because he immediately qualified for benefits after making the annuity purchase.