If your spouse requires nursing home care, you should know by now that you’re allowed to keep certain assets plus a certain amount of money, known in most states as a community spouse resource allowance (CSRA). What is going to happen any money you may have in excess of that amount? Do you have to sign it over to a nursing home? (No, even though lots of people think that is the case for some reason, that is never true.) Do you have to spend it on care? You might want to for various reasons, but you might also be able to take advantage of some serious planning and save tens or hundreds of thousands of dollars. The way to do that is with something called a Medicaid-compliant annuity. This article will provide you with an extremely simplified explanation of the strategy. You are basically entering into a contract with an insurance company where you will pay a certain amount and they will send you a monthly check for some period of time. What this accomplishes is your countable assets are being turned into a non-countable income stream.

Most states do not consider an annuity purchase to be a transfer for purposes of eligibility for Medicaid, provided it meets certain explicit requirements. The annuity will need to be an immediate income-only annuity that cannot be stopped or surrendered. It must be actuarially sound – which is to say, not too short. The State must be a designated beneficiary to the tune of whatever they spent on care for the Medicaid applicant, if the annuitant (the well spouse) ends up dying before the annuity period is up. You can expect to get back all of the money you put into the annuity, plus a miniscule amount of interest, but this is not an investment-grade product by any means.

An annuity like this can make literally hundreds of thousands of dollars disappear overnight and transform someone from radically over the asset requirements to a prime Medicaid candidate. There are a lot of moving parts involved in making it happen, especially if it needs to get done in a timely fashion. These annuities are not the same as what most financial advisors or bankers refer to as a traditional “annuity,” and those products will not help you with Medicaid eligibility here in New Jersey. The process practically requires an experienced financial advisor and a dedicated elder care attorney. If you’re looking to investigate the possibilities and do some advance planning, please contact my office right away so we can give you more information.