TDAs and Texas Medicaid Planning

A couple shaking hands with their financial 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.

A recent change in the Texas Medicaid Agency’s interpretation of the word “annuity” means greater opportunities when it comes to Texas Medicaid planning in the state. Pursuant to the Texas Medicaid Handbook, your clients’ retirement assets may be invested in tax-deferred annuities instead of immediate annuities.

tax-deferred annuity is primarily used as a vehicle for accumulating savings, with the expectation of eventually distributing those savings. Alternatively, an immediate annuity is primarily used as a vehicle for distributing savings and is commonly used to provide retirement income.

Unlike an immediate annuity, which makes monthly payments and (generally) has a low rate of return, a tax-deferred annuity does not require monthly payments and offers a greater rate of return. At the same time, the tax-deferred annuity, like the immediate, is considered neither a resource nor a transfer of assets* under this new interpretation of Texas Medicaid eligibility.

Rates We Offer

See the rates** below:

• 1-year Annuity 1.00%
• 2-year Annuity 1.50%
• 3-year Annuity 1.75%
• 5-year Annuity 2.45%
• 7-year Annuity 2.65%
• 10-year Annuity 3.00%

For premiums of $250,000+:

• 5-year Annuity 2.65%
• 7-year Annuity 2.85%
• 10-year Annuity 3.20%

*This message is intended for insurance agents practicing in the state of Texas, and is applicable in Texas only. We recommend that an agent always work with a qualified elder law attorney on Medicaid-related cases.

**These annuities are underwritten by ELCO Mutual Life & Annuity, Lake Bluff, Illinois. Policy forms SPD11-05 and SPD11-10. Surrender charges apply for early withdrawals; see policy form for details.  Rates updated 10/12/16.