Medicaid Annuities
What is a Medicaid Annuity?
A Medicaid annuity, also known as a Medicaid compliant annuity or a Medicaid qualified annuity, is a simple insurance product that helps people gain access to Medicaid benefits while protecting assets for a spouse or the next generation. It is a single premium immediate annuity, meaning it is funded with a one-time payment. It then pays the owner back their premium amount plus a small amount of interest over the term of the contract.
For Medicaid purposes, the annuity has no cash value, meaning it is not considered an asset. It is also structured in a way that complies with the Medicaid's rules and purchasing one will not trigger a penalty period.
How Does a Medicaid Annuity Work?
Once you determine how much money needs to be spent down to qualify for Medicaid, you can fund that money into the annuity with a one-time premium payment. You then indicate the term of the annuity, or the length of time in which it pays income back to the owner.
Once the contract is issued, the money used to fund the annuity is no longer considered an available asset, so long as the annuity contains the correct Medicaid-compliant provisions. Instead, the annuity payments, which are typically made monthly, will count as income to the owner.
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Will the Additional Income Impact Eligibility?
No, not if the annuity is set up properly and tailored to meet your specific situation. That is why it's crucial to work with a professional who understands this insurance product and how it can be used as part of the Medicaid spend down process.
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