An annuity is a contract between you and your insurance company in which you agree to pay your insurance company a specified monetary amount and the company agrees to send you a monthly check for the remainder of your life. In regards to Medicaid eligibility, most states do not consider the purchase of annuity as a transfer of assets. It is considered an investment that turns a countable asset into an income stream not counted by Medicaid–provided it is in the community spouse’s name.
An annuity purchase is not considered a transfer if meets the following criteria:
- It is irrevocable. Your only access is through the monthly payments.
- You get back what you paid into it during your life expectancy.
- It was purchased with a shorter term certain than your life expectancy. A term certain is a guaranteed number of payments regardless of the your lifespan.
- The state is the beneficiary of remaining annuity payments, which are reimbursed up to the amount Medicaid paid for either spouse.
Consult with your elder law attorney if you have a Medicaid-eligible spouse in a nursing home and are considering purchasing an annuity.
