Medicaid Friendly Annuity

[Bwell86]

I got a call in yesterday from a man who says his wife is slipping mentally and may end up in a nursing home within a year.

She has $108K in an IRA in her name. He called to see if we could store that in an annuity to protect the assets from all going to the nursing home and the state of Il.

I'm familiar with the five year look back rule, but I'm not sure about other ins and outs of Medicaid.

He has an additional $54k in joint NQ money he wants to put into Mutual Funds. He also has an IRA of his own worth $134K that he wants in an annuity as well.

If I can find something that works for him, it would be a heck of a call in.


Thanks for any advice.

 

[scagnt83]

This is very state specific. First, ask them if they are working with an Elder Law Attorney. If not, then you should make it a stipulation that they do if you take this case. That is for both their protection and for your protection. If they arent then it would make a great opportunity for you to make a new professional connection and possible referral source.

Different states have different rules regarding this. A "Medicaid Friendly" annuity is just a generic term. In our world it is called a SPIA. Most SPIAs out there qualify for the Medicaid exemption.

The short version of how this works is that the "Community Spouse" (the one who does not need Medicaid), is allowed only a certain amount of assets for the LTC Spouse to qualify. Usually this amount is under $100k. The LTC Spouse is only allowed a very small amount of assets (usually below $10k) for them to qualify. So jointly, they must spend down to around the $50k-$80k mark in most states for the LTC Spouse to qualify.
But, many states allow for a SPIA to be bought with those excess funds. The amount in the SPIA is not subject to the Medicaid Spend Down.

But there are lots of state specific rules that you need to know and be careful of. This is why an attorney needs to be involved. Some states allow an appeal process to increase the Community Spouse Asset Exemption if current income is too low to cover expenses. Also, some states allow for rental property to be purchased to create the income in lieu of the SPIA. And each state has different laws and exemption amounts for the Community Spouse and how they treat Annuities. Also the timing of when they buy the annuity (before or after care starts) matters and is state specific. And these laws change all the time.

The SPIA product basically must payout for at least the Community Spouses actuarial life expectancy per SSA guidelines. So it does not have to be a life pay option.

So ask about the attorney and go from there. But absent an attorney, you will be looked at as the "trusted expert" to guide them through this. You do not want that risk.

 

[Justin Bilyj]

Search for Doug Warren annuity strategies book. Its free online
has a chapter or two on jow to deal with this, but what Tyler said was very solid advice.

 

[slittle]

Does anyone know which companies are selling these annuities in Oregon?

 

[JoeAnnuity]

Genworth and Standard Life have Medicaid Friendly products in Oregon. However, they need to be used as part of a plan to file for state benefits for nursing home care. They cant be used as a pre-emptive strike against the possibility of filing for state benefits somewhere down the road. That's why it is important to work with an elder care attorney on a case like this and not go it alone.

 

[slittle]

Thanks. If I do any of these it will be at the request and direction of an elder law attorney.