A Medicaid-Complaint Annuity (“MCA”) is a single premium immediate fixed annuity that allows Medicaid applicants to convert a non-exempt asset into an income stream to provide immediate Medicaid eligibility.

The Medicaid Rule:  An individual must “spend down” assets to less than $2,000 to qualify. 

When Might One Consider an MCA?

  • An individual has funds, but not enough to pay for long-term care indefinitely
  • An individual is entering a long-term care facility and the spouse is concerned she will become impoverished
  • Prior gifts were made, and the family needs a source of payment during the Medicaid penalty period
  • An individual wishes to protect assets for children

An MCA allows an individual to convert an asset that would otherwise be counted towards the Medicaid asset limit into a non-countable asset with an income stream.  If the MCA is purchased with the Medicaid applicant’s funds, then the income must be used towards the applicant’s care.  If the MCA is purchased with the spouse’s funds, then the income is not considered for Medicaid purposes.  MCA’s allow for immediate Medicaid eligibility.

What makes an annuity “Medicaid Compliant”?

  • Irrevocable
  • Non-transferrable
  • Payable for no longer than the annuitant’s actuarial life
  • State is named primary beneficiary for the amount spent on the annuitant’s care

Types of assets that can be converted into a Medicaid-Complaint Annuity:  Cash, investment accounts, IRA’s, existing annuities. 

While MCA’s won’t work for every client and circumstance, it is a strategy that should be considered.  As always, nothing is as effective as planning and contacting a Certified Elder Law Attorney before funds are depleted.  It is always wise to plan, but sometimes we must utilize strategies to achieve immediate Medicaid eligibility to resolve poor decision-making or to provide a better life for our clients and their families.