Debunking the Myth of Using Annuities to Protect Assets when Applying for Medicaid

The concept sounds simple  enough: turn your assets into an annuity stream, and you won’t have excess assets, and you’ll be eligible for Medicaid. But it’s a lot more complicated than that.

A Moving Eligibility Target

Who  knows what the rules for Medicaid eligibility are going to be when you actually apply? Rules concerning eligibility are constantly being changed and updated. This makes it difficult to forecast specific income and asset requirements. There are also sever tax ramifications that may make this strategy increasingly expensive.

Non-liquid Assets

When you buy an annuity, you lose control of your nest egg. If you ever need money for, say, medical expenses, a new roof, to assist a child or any other essential expense, you’ll pay huge penalties on the withdrawal.

Medicaid Listed as Beneficiary

As it relates specifically to Medicaid, if one goes on Medicaid, they  will have to name Medicaid as a beneficiary of their annuity, for repayment of any monies paid on your behalf.

If you still want to investigate the annuity option, I urge you to consult with an experienced elder-law attorney before taking any action.

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