How to Know When a Client is a Good Fit for an MCA

professional talking with elderly woman
Amy Beacham, MBA
Amy Beacham, MBA July 14, 2022

As Marketing Director, Amy is responsible for all company communications and ensuring our clients have the most accurate and up-to-date information. In addition to her communication expertise, she has prior experience as a paralegal and a Krause Benefits Planner.

Disclaimer: With Medicaid, VA, and insurance regulations frequently changing, past blog posts may not be presently accurate or relevant. Please contact our office for information on current planning strategies, tips, and how-to's.

If you’re considering adding the Medicaid Compliant Annuity (MCA) to your product arsenal, one of the biggest hurdles to overcome is determining when you should recommend an MCA to your client. That’s why we’ve broken down the three main factors that make someone a good candidate for an MCA. Keep reading to learn more.

1. The client must be in a facility.

At its core, the MCA is a crisis planning tool. A client would be considered in crisis when they’ve already entered a facility without having done any pre-planning or after exhausting their LTCI or Medicare benefits. The key is an MCA can only be purchased when the client is immediately ready to apply for Medicaid, meaning they must be in a Medicaid-approved facility and receiving long-term care.

2. The client must be in a facility indefinitely.

In addition to residing in a facility, it’s important that the client is likely going to remain in the facility indefinitely. After all, an MCA can’t be undone. The contract is irrevocable and non-assignable, meaning its parties cannot be changed, and the policy cannot be sold on the secondary market. Therefore, it’s important to ensure the client is not in a temporary care situation. For example, an MCA is not appropriate for someone in a facility for rehabilitation.

3. The client must have some assets they wish to protect.

We believe every legacy is worth protecting, no matter how large or modest a client’s assets might be. However, in order to use an MCA, the client must have enough excess countable assets at risk to warrant funding the annuity. The minimum investment amount required on an MCA is $5,000 in most states, but in many cases, the client can use alternative spend-down methods when dealing with an amount this small.

Furthermore, the client’s assets must be accessible and liquid in order to fund an MCA. If the client’s excess countable assets are all tied up in a cabin or a piece of land, this property would first need to be sold before it can be used to fund an MCA.

There is no hard and fast limit to how many assets make an MCA worthwhile, so if you’re unsure whether your client is the right fit, we encourage you to contact us! We can discuss the case facts in more detail and help you determine whether or not an MCA makes sense for a particular case.

What If Your Client Doesn’t Fit These Guidelines?

Not every client concerned about the cost of long-term care is going to be a good candidate for an MCA. That’s why we offer both pre-planning and crisis planning products, allowing you to offer the full spectrum of long-term care planning products to clients, no matter the stage they are in. If you have a client who is healthy, consider discussing Long-Term Care Insurance with them. Or, if you have a client with only a small amount to spend down, consider a Funeral Expense Trust.

Not sure where to begin? Simply contact us to discuss your client’s options!