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Top 5 Medicaid-Compliant Annuity Strategies

There are several ways to set up a Medicaid-Compliant Annuity. The best plan is always the one that fits your client's unique situation — here are our top five to consider.

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Our Top Five Strategies

1

Traditional Community Spouse Plan

The most straightforward and widely used MCA strategy for married couples. The community spouse puts the couple's extra countable assets into an MCA, which then pays income to that spouse. It works with both qualified and non-qualified funds, and the community spouse can usually choose the annuity term as long as it fits within their life expectancy.

2

Gift/MCA Plan

The most popular MCA strategy for single clients. Instead of putting all the spend-down money into an MCA, the client uses Medicaid's divestment rules: they gift about half their assets to a loved one and use the rest to buy an MCA that pays out during the penalty period. We help determine the best amounts for both the gift and the annuity.

3

“Name on the Check” Rule

The Traditional Community Spouse Plan works well when the community spouse owns qualified funds. But if the institutionalized spouse owns an IRA, transferring it would trigger a taxable event. Instead, the institutionalized spouse can turn their IRA into an MCA and name the community spouse as payee. This is not available in every state — contact our office for details.

4

MCA for the Institutionalized Spouse

Similar to the “Name on the Check” Rule, but the institutionalized spouse remains the payee. The goal is to shift annuity income to the community spouse under the Monthly Maintenance Needs Allowance (MMNA) rules, which can suit lower-income clients. It also offers more favorable beneficiary rules than the Traditional Community Spouse Plan.

5

Standalone MCA Plan

An alternative to the Gift/MCA Plan for single clients: fund the entire spend-down amount into an MCA for immediate Medicaid eligibility. On the client's passing, the state recovers its portion of the remaining funds and the rest goes to the contingent beneficiary. Typically used where the Gift/MCA Plan is not feasible, or for clients with a shortened life expectancy.

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Whichever strategy fits your client, our team will provide a comprehensive proposal outlining the MCA plan and its economic benefits. All proposals and guidance are completely complimentary.