What Is the Standalone MCA Plan for a Single Person?

elderly man sitting alone in bedroom
Katie Camann
Katie Camann October 24, 2023

As Content Marketing Specialist, Katie drafts and edits content across multiple platforms, including blogs, Industry News, emails, videos, website pages, and more. She conducts research and gathers up-to-date information to keep our clients well-informed.

If your single client has limited longevity and is expected to pass away in the near future or if the Gift/MCA Plan is not viable in your state, your client may benefit from using the Standalone MCA Plan.

With this strategy, the individual funds their entire spend-down amount into a Medicaid Compliant Annuity (MCA). This quickly eliminates their excess countable assets, thus qualifying them for Medicaid benefits. However, the payments from the annuity will become part of their monthly Medicaid co-pay. In order to minimize these payments, the MCA term should be structured using their full Medicaid life expectancy.

Read More: How to Know When a Client Is a Good Fit for an MCA

How Does the Standalone MCA Plan Work?

Once the individual begins receiving benefits, the state Medicaid agency will pay the nursing home its Medicaid Reimbursement Rate, which varies by state and tends to be significantly lower than the private pay rate. When the individual passes away, the state Medicaid agency, as the primary beneficiary of the MCA, is entitled to recover funds up to the amount of those expended on behalf of the individual. After the state Medicaid agency has made its claim, any remaining funds will pass to the contingent beneficiary, which is the client’s intended heir(s).

The Standalone MCA Plan Process

  1. Use the full spend-down amount to purchase an MCA, and structure the term using the full Medicaid life expectancy.
  2. The MCA payments become part of the Medicaid co-pay, and the state Medicaid agency pays the Medicaid Reimbursement Rate to the nursing home.
  3. Upon the individual’s death, the state Medicaid agency can recover up to the amount of funds expended on their behalf.
  4. The remaining annuity funds will then go to the contingent beneficiary, the individual’s intended heir(s).

The Economic Benefit of the Standalone Plan

The economic benefit of the Standalone MCA Plan is dependent on the lifespan of the Medicaid recipient. The longer the individual lives, the fewer residual benefits are available for the contingent beneficiary. As such, the success of this strategy cannot be guaranteed. Therefore, the Gift/MCA Plan is often more appealing, when viable, since the wealth transfer is made upfront.

Click here to see a case study of the Standalone MCA Plan.

Learn More: What Is the Gift/MCA Plan for a Single Person?

If you’re not sure which MCA strategy is right for your client, contact our office to discuss your case with us!