How to Fund a Medicaid Compliant Annuity

When it comes to crisis Medicaid planning, timing is everything. Once you’ve identified that a Medicaid Compliant Annuity (MCA) is the right product for your client, the next critical step is getting the funds moved quickly and efficiently to purchase the annuity.

But how does your client actually move funds into an MCA? Fortunately, today’s options offer more flexibility than ever before, allowing you to tailor the process to your client’s specific situation, while helping them achieve Medicaid eligibility as quickly as possible.

Read More: Using MCAs to Preserve Assets in Long-Term Care Planning

There are several ways your clients can fund an MCA, each with its own process and considerations. Here’s what you need to know:

1. Cashier’s Check

Traditionally, the most common funding method was by check — specifically, a cashier’s check. This method ensures that funds are immediately pulled out of your client’s account and available to the carrier once deposited, which is helpful for Medicaid eligibility purposes since it establishes that the spend-down occurred in the month the check was issued. Personal checks are also accepted, but we can’t guarantee when the funds will be drawn from the account.

2. Wire Transfer

Wire transfers are another fast and secure option. With this method, the client works directly with their bank to wire the funds to the insurance carrier. While this can be done quickly, it typically involves a fee from the client’s bank and requires careful coordination to ensure accuracy.

3. ACH (Automated Clearing House) Transfer

A more recent and increasingly popular option is funding via ACH transfer. This method allows both the Krause service fee and the annuity premium to be drafted electronically from your client’s bank account, often with a quick turnaround time and no extra fee. This option is currently available for MCAs purchased through ELCO and UFL.

Here’s how it works:

• The client completes an ACH authorization form alongside the MCA application.
• Krause drafts their service fee directly via ACH.
• The annuity carrier then initiates the ACH draft for the annuity premium.

4. Transfer of an Existing IRA or Non-Qualified Annuity

In some cases, clients may choose to fund their MCA by transferring an existing IRA or annuity contract. This strategy can provide a tax-efficient way to reposition assets that would otherwise count against Medicaid eligibility. Transferring retirement assets or an existing annuity does involve additional paperwork and processing time, but it’s a valuable option for clients who want to avoid liquidating these accounts.

Read More: How to Handle Retirement Accounts in Medicaid Planning

Choosing the Best Funding Method for Your Client

Ultimately, the best funding option for your client will depend on their specific circumstances, including the source of their assets, their bank’s capabilities, and the urgency of their Medicaid eligibility timeline.

Helping your clients successfully fund a Medicaid Compliant Annuity is a vital part of any crisis Medicaid plan. By understanding the various funding options available, you can better guide your clients through this crucial step with confidence and clarity.

If you’d like to discuss a case or learn more about funding strategies for an MCA, we invite you to schedule a call with our team. We’re here to help you navigate the process and provide tailored support for your clients.