medicaid-compliant annuity

Is a divorce needed to qualify for Medicaid?

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A common fear of married couples is that they will need to get divorced to qualify one spouse for Medicaid. Fortunately, this is rarely the case. Medicaid has policies in place to avoid “spousal impoverishment.” For example, Medicaid allows a married couple to perform a “Division of Assets,” which can enable the spouse who does not need nursing home care to keep half of the couple’s “countable resources.” Also, Medicaid-compliant annuities can be used to both qualify a spouse for Medicaid and create a revenue stream for the spouse who does not need nursing home care.

Advising couples regarding Medicaid eligibility can be one of the most rewarding aspects of elder law, but it is also one of the most complicated. Medicaid provides powerful tools to protect against impoverishment of a spouse while not requiring a divorce. These tools are found in complex rules that can be difficult to navigate on your own. Be sure to contact an elder law attorney to discuss these powerful but complex options.

What is a Medicaid-compliant annuity?

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With few exceptions, holding a financial investment in excess of the asset limit (currently only $4,000 for single persons) will disqualify you for Medicaid in Missouri. One of the most powerful exceptions to this rule is a Medicaid-compliant annuity. With a Medicaid-compliant annuity, money that otherwise would need to be spent down to qualify for Medicaid can be used to purchase an annuity that creates a revenue stream. The revenue stream can either go to a spouse to help replace the lost income of the person going into the nursing home, or to help pay for a penalty period if necessary.

To be a “Medicaid-compliant” annuity, the annuity must be irrevocable, payout during the expected life expectancy of the annuitant, not have any balloon payments, and name the State of Missouri as the first beneficiary when the person dies. If the annuity pays out completely within the person’s life-time then there will be no payment to the State.

A Medicaid-compliant annuity can be a powerful tool as part of an overall planning strategy to ensure the health care a senior needs is paid for while protecting the senior’s life savings. To learn more contact us today.