What Is a Medicaid Annuity?
June 4, 2019 by Geoff Williams
IT’S A PRECARIOUS situation that many elderly people find themselves in: They need long-term nursing home or assisted living care, but they don’t have enough money to pay for it. So they consider applying for Medicaid, the joint federal-state program that offers health coverage to eligible low-income seniors. But because they have a little too much money to qualify for Medicaid, they try a Medicaid “spend down,” a financial strategy that essentially requires a person to become even more cash-poor. In other words, they get to have their health care paid for but are more broke than ever.
Medicaid spend downs aren’t always as bad as they sound. If you’re helping a parent get rid of their revenue, at least the money they’re spending often goes to things they need, like a new wheelchair or hearing aid. But sometimes they are as bad as they sound. What if your father needs Medicaid to pay for a nursing home but your mother is fine? It’s all well and good to spend money to make your father poorer – he’ll get his needs met at the nursing home. But if you drain your parents’ bank accounts, your mother will have even less to get by on.
That’s why some people opt for a Medicaid-compliant annuity.