December 2019

Annuities and Medicaid

An annuity takes a certain sum of money and creates a guaranteed income. People who are weary of the stock market's ups and downs are comforted by the fact that their investment is guaranteed for a certain period of time. The typical annuity is purchased through an insurance company. The purchaser may not immediately create an income stream but instead allow the purchase to grow as an investment. As an insurance policy it can grow tax free until it is annuitized. Upon annuitization the buyer may choose to have a fixed return at a certain value or may use a variable annuity that is subject to the market but with a minimum guarantee of payment. Annuities can be expensive based on other investment options and there may be penalties if the buyer decides to cancel the annuity. The purchase of an annuity should be clearly understood. They have there place based on particular goals of the buyer.

In the case of long-term care, Medicaid law recognizes that applicants may take large sums of assets, annuitize it and then apply for Medicaid having taken their countable assets and converting them into an income stream.

Medicaid law does not outlaw annuities but it has strict rules when it determines eligibility for the applicant. The annuity must be irrevocable, non-assignable, and actuarially sound based on Medicaid's life expectancy tables. In addition, Medicaid requires that the state Medicaid agency be named as the primary beneficiary in the event the annuitant dies before full payout.

Annuities are an important and legitimate tool used by elder law attorneys to help preserve assets for the community spouse (the spouse not requiring Medicaid long-term care coverage). We can transfer resources to the community spouse, annuitize them and it does not affect eligibility of the applicant spouse.

However, the elder law attorney must understand annuities, Medicaid law and the needs and goals of the individual and or family. Failure to follow Medicaid rules and regulations may create a penalty that can delay eligibility.

Important News for the New Year!

Edward Zetlin Law will be merging with the law firm of Baskin, Jackson and Lasso on January 1, 2020. Edward Zetlin will continue to handle Elder Law, Special Needs and Estate matters. Nothing in terms of our practice will change. Our new contact information is:

301 Park Ave.
Falls Church, Virginia 22046

Tel. 703-534-3610
Fax 703-536-7315

Contact us at (703)379-0442;

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