Far too many people believe that they can simply transfer or give away their property to someone else, before applying for Medicaid benefits. The truth is, if you do that at any time within five years of submitting your Medicaid application, a period of ineligibility will likely be imposed. In other words, as your estate planning lawyer will tell you, you cannot receive any benefits until that period is over. With proper planning, you can retain control of your assets and still qualify under Medicaid law. One option is to use a Medicaid compliant annuity. Be sure to discuss this option with your estate planning lawyer.
What is a Medicaid compliant annuity?
An annuity is a fixed sum of money paid to an individual each year for a period of time. A Medicaid compliant annuity is a special type of annuity that will not jeopardize your Medicaid eligibility. In most cases, a Medicaid compliant annuity is a Single Premium Immediate Annuity (SPIA), which is a deferred annuity that can be converted so that it pays out over the annuitant’s life expectancy.
What makes it Medicaid compliant?
In order to be Medicaid compliant, the annuity must be irrevocable and non-assignable. It must also be actuarially sound, meaning there is sufficient funding and insurance to pay any losses and related costs which may already be known or projected. The annuity needs to provide for equal payments with no deferral or balloon payments. Finally, the annuity must identify the state Medicaid program as the primary beneficiary to the extent that medical assistance benefits were provided.
What are the benefits of a Medicaid annuity?
As nearly every estate planning lawyer can tell you, there are benefits to having a Medicaid compliant annuity. If the time comes when you need long-term nursing home care, it is important to either have no assets or the proper assets that allow you to remain eligible for Medicaid. Stocks, mutual funds, CDs, IRAs and money market accounts are not the right assets. Without the right assets, you may need to “spend down” your assets in order to meet the eligibility requirements.
On the other hand, a Medicaid compliant annuity is not considered a countable asset. That means if you reposition your countable assets into a correctly structured Medicaid annuity, then you can still become eligible for Medicaid benefits.
Understanding the requirements of Medicaid
Medicaid is a medical assistance program providing health care benefits to low-income citizens. Federal, state and local taxes are used to fund this program and those funds are used to help eligible individuals pay their medical expenses. In many cases, recipients of Medicaid benefits are not required to pay for covered medical expenses, except for possibly a small co-payment. Clients often have questions about Medicaid eligibility requirements in Missouri and Kansas. Here is what you should know about Medicaid law.
When do you need to start creating your Medicaid plan?
It is not too late to start creating your plan for the potential need for Medicaid benefits. Although it is always best to start as early as you can and plan ahead in order to ensure that you will qualify for Medicaid, there may still be some options available to you later on. Even if you find yourself in need of Medicaid, it’s not too late to take advantage of the Medicaid law to create your plan.
Why Medicaid planning is essential
If there is any chance that you may need long-term care, you should consider Medicaid planning. As you probably know, Medicaid is a need-based benefits program. In other words, in order to be eligible under Medicaid law, you cannot have financial resources of more than $1,000 to $2,000. Although your homestead is generally not included in determining your resources, it is still possible to exhaust all of your savings before Medicaid will start paying for the cost of long-term care. The purpose of Medicaid planning is to prevent that from occurring.
Who is eligible for Medicaid?
Eligibility requirements for Medicaid are typically different from one state to another. Nonetheless, most states offer coverage for adults with children who live below a certain income level, women who are pregnant, seniors and people with disabilities. There are also other groups of individuals in addition to the aged, blind, and disabled who may be eligible as well. Consult with your estate planning lawyer to go over your options.
Join us for a FREE workshop today! If you have questions regarding Medicaid, or any other estate planning matters, contact a Medicaid lawyer at Gaughan & Connealy for a consultation either online or by calling us at (913) 262-2000.
Latest posts by Chris Gaughan (see all)
- Planning is Critical - May 1, 2019
- If You Want to Retire in Missouri, Be Prepared! - October 18, 2018
- How is a Testamentary Trust Different from a Living Trust? - September 28, 2018