Medicaid Compliant Annuities

Helping you qualify for Medicaid long-term care services

When an individual or couple wants to apply for Medicaid long-term care, their assets and income above a certain amount can render them ineligible. Gifting without proper guidance will result in a Medicaid penalty.

At NJ Elder Law Center, our Medicaid legal team has years of experience helping individuals and couples achieve Medicaid eligibility. One strategy is the use of a Medicaid Compliant Annuity.

We understand that the Medicaid application process can be daunting and confusing, but you don’t need to sell off or give away your assets—and in fact, you shouldn’t. Please consult with our team to develop an individualized strategy to maximize what you have while maintaining Medicaid eligibility.

If you’re considering immediate Medicaid eligibility, a Medicaid Compliant Annuity may be the solution. Please contact us so our experienced attorneys can guide you through the process.

What Is a Medicaid Compliant Annuity (MCA)?

When you apply for long-term care services through Medicaid, a county caseworker reviews your assets to ensure they aren’t above a certain amount. They also document all gifts with a presumption that any asset given away within five years of the Medicaid application was done to create Medicaid eligibility.

If you’re married, both spouses’ assets are counted in determining Medicaid eligibility—even if they’re in the name of the spouse who isn’t applying.

Medicaid Compliant Annuities may be used in certain instances to convert assets that would otherwise disqualify you from Medicaid.

When you buy an annuity, you pay an insurance company a lump sum that they are contractually obligated to return to you in monthly installments.

A Medicaid Compliant Annuity may be a good idea for you if:

You have assets or savings, but not enough to pay for long-term care indefinitely
One spouse needs long-term care and there are concerns that the other spouse may become impoverished as a result
You made financial gifts during the five-year Medicaid “look back” period and are temporarily ineligible for Medicaid
You wish to protect your assets for beneficiaries

Our approach

At NJ Elder Law Center, our legal team is dedicated to walking you through the entire process from start to finish.

Too often, people spend their life savings on long-term care before reaching their eligibility for Medicaid. This isn’t necessary. Working with a Medicaid planning law firm can help you qualify while retaining hard-earned assets.

We regularly help couples and individuals plan and apply for Medicaid. We diligently communicate with clients to ensure Medicaid applicants remain qualified throughout the application process.

At NJ Elder Law Center, we’ll answer your questions and support you throughout the entire process.

Why a Medicaid Compliant Annuity Can Help

To be eligible for Medicaid long-term care services, including nursing home care, an individual or couple must have assets that fall under specific financial limits.

People whose financial assets exceed these limits must pay privately for care—which costs $10,000-$15,000 a month in New Jersey—until their savings are gone.

Alternatively, they may give assets away to family members or friends. Unfortunately, this tactic usually backfires, as the Medicaid application process includes a “look back” period, and gifts made in the last five years are penalized and delay Medicaid coverage.

Instead of spending savings on care until nothing is left, many applicants would benefit from converting those savings into an annuity, or a monthly income stream, that can help them qualify for Medicaid more quickly and maintain a better quality of life.

Using annuities can be especially useful for couples when only one person needs long-term care since the Medicaid application process considers the couple’s assets as jointly owned but treats income separately.

Certain assets are considered exempt from being counted toward the Medicaid asset limit, including:

The primary home
Personal items
Household items
A car
An irrevocable burial trust

What Makes an Annuity Medicaid Compliant?

Most annuities are NOT Medicaid compliant.

To be Medicaid compliant, an annuity:

Must be irrevocable, meaning that it can’t be changed or undone
Must be non-transferrable, meaning that it can’t be sold or transferred to someone else
Can’t establish payments that last for longer than the applicant’s estimated life expectancy
Must name the State of New Jersey as the primary beneficiary for the amount spent on the person’s care

Assets that can be converted into a Medicaid Compliant Annuity include:

Cash
Investment accounts
IRAs
Existing annuities

Annuities and Marital Status

Annuity rules vary according to marital status. If you’re single and in a nursing home, you can only keep a minimal amount each month to spend on personal needs. The rest of the annuity must go toward paying the care facility. If you’re receiving at-home care, however, the limit is higher.

If you’re married and only one spouse is applying for Medicaid long-term care, annuities can be beneficial because while both spouse’s assets are countable, income is not. This means that the spouse who doesn’t need care can receive income from an annuity that won’t render their partner ineligible for Medicaid.

Work with an Experienced Medicaid Professional

At NJ Elder Law Center, our legal team has extensive experience helping individuals and couples set up Medicaid Compliant Annuities.

Our goal is to help families through the annuity process so that their loved one can qualify for Medicaid while maintaining their quality of life, ensuring the healthy spouse doesn’t become impoverished.

To accomplish this, we’ll listen closely to your goals and concerns, answer your questions, and work with you every step of the way.

If you’re interested in setting up a Medicaid Compliant Annuity or you have questions about applying for Medicaid, contact us. Our knowledgeable Medicaid attorneys and legal team are glad to guide you through the process.