Before You Start a “Spend Down” CALL US!!!

Have you been told you or your loved one has too much money in savings to qualify for assistance in paying for nursing home care? Have you been told you must “spend down” savings and investments? In some circumstances, this isn’t entirely true. Missouri has rules in place to help avoid impoverishment for the spouses of nursing home patients and patients who may be able to return home.

It is imperative that you consult an experienced elder law attorney as soon as possible upon learning that your loved one needs skilled nursing care! Ozarks Elder Law offers free initial consultations or workshops to help you understand your options. For example, a Medicaid Compliant Annuity can be ideal for married couples to avoid losing their life savings. Careful planning is needed to make sure an annuity will work for you or your spouse.

What is a Medicaid Compliant Annuity and how does it work?

A Medicaid Compliant Annuity, in its simplest form, is a contract with an insurance company. You pay a certain amount of money to the company and the company sends you a monthly check for a set period determined by you and your attorney.

In Missouri, the purchase of a Medicaid Compliant Annuity is not considered to be an asset transfer for Medicaid eligibility purposes. It transforms otherwise countable assets into a non-countable income stream. The income must be paid to the well spouse and not the spouse in the nursing home.

The annuity purchase must meet the following requirements:

  1. It must be irrevocable and non-assignable–you cannot have the right to take the funds out of the annuity except through the monthly payments.
  2. Monthly payments must be equal or nearly equal for the duration of the contract.  There can be no deferral or balloon payments.
  3. If you purchase an annuity with a term certain (a guaranteed number of payments), it must be shorter than your calculated life expectancy.
  4. The state must be named the remainder beneficiary, after your spouse (up to the amount Medicaid pays on your spouse’s behalf.)

Example: In Missouri, the most money you can keep for yourself and still have your spouse, who is in a nursing home, qualify for Medicaid is $137,400 (in 2022). However, you have $237,400 in countable assets. You can take the difference of $100,000 and purchase an annuity, making your spouse immediately eligible for Medicaid. The annuity would pay back in monthly installments for the term of the contract.

For a single individual, the use of a Medicaid Compliant Annuity takes a different approach. It is important to seek the guidance of an elder law attorney. In some states, Medicaid Compliant Annuities may have a place for single individuals. Income from an annuity can be used to help pay for long-term care during the Medicaid penalty period that results from gifting transfers. In such cases, with correct planning, the annuity is usually short-term, just long enough to cover the penalty period.

Annuities are a very powerful tool in the right circumstances. Be sure to consult with an experienced elder law attorney before pursuing the strategy described above.

Call 417-868-8200 to schedule a free consultation and discuss your options or fill out the form below and we will call you.

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