Medicaid can pay for your long term care in a nursing home. But
it's a program only for the poor. Applicants must have very limited
assets and income before Medicaid will pick up the costs of your care.
Assets you have in excess of that limit must be spent down by you on your Medicaid care before free Medicaid kicks in. Finding ways to transfer or convert your excess assets to preserve ownership of them yet still qualify for Medicaid is called 'Medicaid Planning'.
One gimmick to reduce excess assets has been to convert them into an immediate annuity. That's because the resulting 'stream of income' from the annuity is no longer counted as an excess asset under Medicaid rules. So then you can qualify for Medicaid assistance.
In the past, this approach helped you and your annuity beneficiary(s) to preserve those converted assets for your own and her use. But Medicaid rules have tightened up on annuities used to bypass Medicaid costs.
Today, the only 'rule-allowed' annuity for converting your excess assets to qualify you for Medicaid help must fulfill these requirements:
* The annuity must be irrevocable
* The annuity cannot cover a term longer than the purchaser's life expectancy and the payments expected during the annuitant's life expectancy must at least equal the cost of the annuity,
* The payments must begin immediately, so a deferred annuity is excluded, and
* Unless there is a spouse, a minor, or disabled child, the state must be named as the remainder beneficiary up to the amount of Medicaid provided
Under these restrictions, your benefits of using such an annuity are somewhat limited. In the case of a married couple, the healthy spouse can use the income stream for herself. But for a single individual, the interest income of his annuity payments must be paid to the nursing home. When he dies, any remaining money in the annuity first goes to the state to pay any unpaid nursing home bills. This result is true also for the healthy spouse's annuity when she dies.
Your annuity beneficiaries only receive the remaining payments if you die before your annuity's payout term. And, then, they get only what's leftover after Medicaid has been paid any costs you still owe.
Recognize too, that Medicaid only pays for skilled nursing home care. So, if you don't physically qualify to go into a nursing home, you'll have to use your annuity payments to spend for your own home, adult day, or assisted living care.
So don't wait for last minute 'fixes' like a Medicaid annuity. Plan early to handle possible long term care needs. Set up an income trust or consider long term care insurance. Early planning is the best way to save your assets and still get Medicaid.
Source
Assets you have in excess of that limit must be spent down by you on your Medicaid care before free Medicaid kicks in. Finding ways to transfer or convert your excess assets to preserve ownership of them yet still qualify for Medicaid is called 'Medicaid Planning'.
One gimmick to reduce excess assets has been to convert them into an immediate annuity. That's because the resulting 'stream of income' from the annuity is no longer counted as an excess asset under Medicaid rules. So then you can qualify for Medicaid assistance.
In the past, this approach helped you and your annuity beneficiary(s) to preserve those converted assets for your own and her use. But Medicaid rules have tightened up on annuities used to bypass Medicaid costs.
Today, the only 'rule-allowed' annuity for converting your excess assets to qualify you for Medicaid help must fulfill these requirements:
* The annuity must be irrevocable
* The annuity cannot cover a term longer than the purchaser's life expectancy and the payments expected during the annuitant's life expectancy must at least equal the cost of the annuity,
* The payments must begin immediately, so a deferred annuity is excluded, and
* Unless there is a spouse, a minor, or disabled child, the state must be named as the remainder beneficiary up to the amount of Medicaid provided
Under these restrictions, your benefits of using such an annuity are somewhat limited. In the case of a married couple, the healthy spouse can use the income stream for herself. But for a single individual, the interest income of his annuity payments must be paid to the nursing home. When he dies, any remaining money in the annuity first goes to the state to pay any unpaid nursing home bills. This result is true also for the healthy spouse's annuity when she dies.
Your annuity beneficiaries only receive the remaining payments if you die before your annuity's payout term. And, then, they get only what's leftover after Medicaid has been paid any costs you still owe.
Recognize too, that Medicaid only pays for skilled nursing home care. So, if you don't physically qualify to go into a nursing home, you'll have to use your annuity payments to spend for your own home, adult day, or assisted living care.
So don't wait for last minute 'fixes' like a Medicaid annuity. Plan early to handle possible long term care needs. Set up an income trust or consider long term care insurance. Early planning is the best way to save your assets and still get Medicaid.
Source
