Elder Law Library--15 Unmarried Person’s Use of an Annuity to Qualify for Medicaid and Protect Life Savings

Unmarried Person’s Use of an Annuity

to Qualify for Medicaid and Protect Life Savings

Let’s say your monthly income is below the limit. However, your resources exceed the $8,000 limit. You’ve already done the following to protect our life savings:

(1) Transferred assets without violating the 5yr look back rule;

(2) Took advantage of the 10 exempt resources, including your $450,000 home and $50,000 car that Medicaid doesn’t count when determining if your resources exceed the Medicaid limit;

(3) Transferred personal property and real estate to any of the exceptions to the 5yr look back rule that apply;

(4) Paid all your bills under the “spend down” option to protect your life savings; and

(5) Purchased a more expensive house and car.

Now even though you did all of that, you still have $78,000 in resources, $70,000 over the $8,000 limit, too much which is preventing you from qualifying for Medicaid. Assume it’s bank account worth $70,000.

Medicaid will allow you to take the excess $70,000 and purchase an annuity.

Depending on your circumstances, here are some of the benefits that you can get by using the excess $70,000 to purchase a Medicaid qualified annuity instead of paying it to the nursing home:

(a) Reduce Monthly Nursing Home Cost—if you use the $70,000 to purchase an annuity and qualify for Medicaid, then you pay the Medicaid nursing home rate instead of the private pay rate. The Medicaid rate is cheaper. The Medicaid rate could be a couple of thousand dollars or more per month less than the private pay rate, which will increase the rate at which your life savings are spent.

(b) Source of Income—let’s say you purchased the annuity, qualified for Medicaid, got the benefit of the using home Medicaid rate instead of the private pay rate, saving a couple of thousand dollars per month, and only stayed in the nursing home for 6 months. When you leave the nursing home, the annuity can be an additional source of income for you to pay for any medical needs you may have at home.

(c) Something to Give to Kids or Loved Ones—under the right circumstances, and assuming that the reimbursement to Medicaid did not use the total $70,000, what’s left of the annuity can be left to you children or loved ones.

If you didn’t use the excess $70,000 to purchase the annuity, then you may have to use it to private pay for nursing home care. At an average monthly cost of $9,793, it wouldn’t take long for the nursing home to completely wipe out the extra $70,000 in life savings.

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10 Moves You Can Make to Qualify for Medicaid & Protect Your Life Savings
Critical 5 Step Process to Your Medicaid Claim for Nursing Home Care
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