Frequently Asked Questions

Q: Can Medicaid require assets be spent down before a person becomes eligible?

A: Yes. For example, Medicaid can require the following assets be spent down: cash, bonds, savings, stocks, life insurance cash values and real property. With proper planning and competent advice, all of these assets can be preserved.

Q: We’ve been privately paying for nursing home care for my mother for the last two years. Are there still planning strategies available to preserve assets and qualify sooner for Medicaid?

A: Yes. Just because you’ve been privately paying, this does not preclude you from taking advantage of asset preservation strategies.

Q: My mother gave us $10,000 last year. Does this make her ineligible for Medicaid?

A: No. All gifts in the last three-year period are considered, but the amount and the date of the gift determines how eligibility is affected. A $10,000 gift made a year ago does not affect an applicant’s eligibility today. If you have recently gifted assets, consult with a Medicaid practitioner.

Q: If Medicaid has a three-year look back, how can you preserve assets?

A: Despite the fact penalties are incurred for current gifts, sometimes it’s still advantageous to have the applicant gift assets and wait the requisite penalty period. Even better, some asset preservation strategies do not require gifting thus allow for immediate eligibility. The Medicaid Friendly Annuity is one such tool.

Q: What is a Medicaid Friendly Annuity and how it is used to preserve assets?

A: A Medicaid Friendly Annuity is an annuity that is properly structured so Medicaid will not count any assets placed into it. “Excess assets” are placed into a properly structured immediate annuity and the asset is converted to an income stream for a fixed period of time. Usually almost the entire amount of principal deposited can be preserved.

Q: Who should structure the annuity to make sure that it is done correctly?

A: A Medicaid practitioner who spends all or the majority of his time on Medicaid eligibility cases is the best choice. Medicaid Information Resource is such a firm. Sometimes life insurance agents or financial planners are used who have little or no Medicaid experience and mistakes are made. These mistakes can prove costly. Make sure the professional you use knows the “ins and outs” of Medicaid regulations.

Q: Since the Medicaid annuity generates income, doesn’t this income get paid to the nursing home?

A: Yes, however we can minimize the monthly income from the annuity thereby preserving virtually the entire amount of principal in the annuity.

Q: Why is this planning so important?

A: The money saved from years of hard work can be depleted quickly when a family member requires long term care. The loss of lifetime savings can have a devastating financial and emotional impact on the entire family. With sound advice and planning, it is possible to preserve all your life savings, your family home and investments and still qualify for Medicaid.