Handling Non-Medicaid Compliant Annuities in Medicaid Planning: Tax-Deferred vs. Immediate Annuities, Transfers, and More

The use of an annuity can be a useful option for elder counsel when implementing methods to maintain Medicaid eligibility, so long as such annuity is Medicaid compliant. Counsel must recognize essential rules and exceptions in the use of Medicaid annuities and available methods of navigating issues that arise when an annuity is non-Medicaid compliant.

To be eligible for Medicaid, an applicant must have minimal financial resources or assets, which can vary by state. A Medicaid compliant annuity is a planning strategy that allows a Medicaid applicant to reduce their countable assets to be eligible for Medicaid. However, there are various types of annuities, which may or may not be compliant for purposes of Medicaid.

Elder law counsel must be conscious of non-Medicaid compliant annuities and their adverse effect on a client's Medicaid eligibility and consider available methods of dealing with such annuities during the Medical planning process. This may include the use of transfers, liquidation, and other strategies depending on certain factors.

Listen as Dale M. Krause, J.D., LL.M., President and CEO at Krause Financial Services, discusses rules and exceptions for using annuities with Medicaid and regulations applicable to various types of annuities; distinctions between immediate, deferred, and fixed annuities; asset and income regulations; and crafting and implementing Medicaid planning techniques when there are noncompliant annuities involved.