Updated: Jun 30
A Medicaid-compliant annuity is typically sought in a last-minute or “crisis” Medicaid planning situation, such as when a person is about to enter or is currently in a covered assisted living facility or nursing home care facility.
An annuity purchaser gives a lump sum of money to an annuity company in exchange for equal amounts of monthly payments to a healthy spouse (the “community spouse”), while the other spouse receives medical assistance subsidized by Medicaid. This is meant to provide the annuity owner with an irrevocable income stream rather than giving the same liquid assets to home care or a qualified facility.
Notably, an ordinary immediate annuity is not Medicaid-compliant, and only a few companies offer a Medicaid-friendly annuity contract. This is why it’s essential to seek an experienced company that is fluent in your state’s Medicaid rules before considering a Medicaid-compliant annuity.
Ideally, the healthy spouse (annuity owner) can collect income, while the unhealthy spouse can benefit from Medicaid to pay for care at home, an ALF or a nursing.
A Medicaid-compliant annuity can be an effective tool in Medicaid planning, but it’s not a one-size-fits-all solution.