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North Carolina Elder Law Attorney: Medicaid Planning with Annuities

The prospect of your spouse entering a nursing home for long-term care can be overwhelming, especially with all of the logistical issues and care coordination concerns that accompany such a move. Financial planning for Medicaid eligibility can add more stress since there are strict asset and income limits that must be adhered to by both the spouse in need of care and the healthy spouse, otherwise known as the well spouse, in order to receive the benefits. One way that couples plan for Medicaid eligibility is through the use of annuities.

The basic premise of this strategy relies on three facts:


  1. A large amount of cash can be used to purchase an annuity, which guarantees future payments in the form of income over a specific period of time, during a person’s lifetime;
  2. While the spouse in need of long-term care must follow strict income and asset limits, the well spouse is only held to an asset limit with no cap on the amount of income the well spouse can bring in; and
  3. Gifts between spouses are not penalized for Medicaid,


So, the simple explanation would be that the healthy spouse would purchase an annuity with the couple’s own assets to be used as income for the well spouse, to be paid over a period of several years. However, like with everything else about Medicaid eligibility, planning with annuities isn’t that simple. For instance, the annuity payments must be made in total before the end of the well spouse’s life expectancy, and the state generally must be named as the primary beneficiary of the annuity after the well spouse. This ensures that the remainder of the annuity payments goes back to the state to repay the Medicaid benefits, if the healthy spouse at home dies first.

There are several other rules and regulations regarding planning for Medicaid coverage with annuities including transfer, revocation, the term of payments in regard to the life expectancy of the well spouse, and the amount of money in each monthly annuity payment. It’s best to consult with a North Carolina elder law attorney who has experience working with annuities to successfully plan for Medicaid coverage.

If you would like to learn more about Medicaid eligibility planning through the use of annuities, or if you’d like to discuss different ways to plan for Medicaid eligibility for the future, please set up an appointment at our North Carolina elder law office by calling (336) 378-1122

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The Elderlaw Firm

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