The Medicaid Compliant Annuity is available in 48 states and the District of Columbia. It is irrevocable, non-assignable, and typically must name the state Medicaid agency as beneficiary. The product has zero cash value and is considered income only. It can be funded with either non-qualified or tax-qualified funds. The minimum investment amount is $5,000, and the minimum term length available is two months, in most states.
We’ve offered Medicaid Compliant Annuities since the early 1990’s. Several federal laws and regulations have altered the structure and strategy over the years, but the basic planning concept remains the same: Utilize a properly structured immediate annuity to convert excess assets into an income stream, thereby accelerating Medicaid eligibility. Most recently, however, it’s the Deficit Reduction Act of 2005 (DRA) provides the framework for an annuity’s “Medicaid compliance.”
Strategies using an MCA vary depending on marital status. When dealing with a married couple, an MCA is purchased by the community spouse to spend down excess countable assets. They are the owner and payee of the contract. The institutionalized spouse can then gain immediate Medicaid eligibility. In the case of a single person, they may consider using the “Gift/MCA Plan” to accelerate eligibility while still creating a wealth transfer to heirs.
To qualify for Medicaid, an applicant must be 65 years of age or disabled and must be a U.S. citizen or qualified alien. Because the Medicaid program is administered at the state level, most states have their own residency requirements. Most importantly, the applicant must be residing in a Medicaid-approved facility – typically a skilled nursing home. Some states may have waiver programs which extend to assisted living facilities or at-home care as well.
The income of a Medicaid applicant must be below their cost of care. In some states, a Qualified Income Trust may be required if their income exceeds the current threshold. There are no limits on the income of the community spouse. However, if they have very low monthly income, they may be entitled to some of the institutionalized spouse’s income under the Monthly Maintenance Needs Allowance rules.
The primary reason most people don’t automatically qualify for Medicaid is they have too many countable assets. For a single person, they can typically only keep $2,000 in most states. For a married couple, the amount of the Community Spouse Resource Allowance varies but is no more than $126,420 in 2019 in most states. This means most applicants must spend down thousands of dollars. One quick way to accomplish this is through the purchase of an MCA, which contains zero cash value.
When it comes to choosing the product that’s best for your client, we’ve got you covered. We work with a number of dependable insurance carriers to supply you with the best products guaranteed to help your client gain eligibility for benefits, including companies with A.M. Best ratings as high as “A+”. We also offer terms as low as two months with product available in 49 states, plus the District of Columbia. Our carriers work as hard as we do to help get your client eligible for benefits.