UPDATE: Rule Change Official for Idaho Medicaid Compliant Annuities Annual Interest Test

7-31-2017 UPDATE

Krause Financial has learned that the language in the Idaho Administrative Code (IAC) specific to the annual interest test has been removed, meaning Idaho Medicaid planners will now be able to fully utilize various Medicaid compliant annuity planning tactics. To learn more about what this means for Medicaid planning in Idaho, continue reading the original post below.

Original Post

The Idaho Department of Health and Welfare has recently proposed a rule change for Idaho Medicaid Compliant Annuities, hoping to remove the “Annual Interest Test.”

This “Annual Interest Test” states that in addition to meeting the standard requirements of the Deficit Reduction Act of 2005, “Any annuity is presumed to produce interest, at minimum, that is equal to the treasury rate.” This rate, as of January 1, 2016, was 1.76% meaning an annuity could not be considered a Medicaid Complaint Annuity (MCA) unless the rate of return was 1.76%.

1. How are Idaho Elder Law Attorneys impacted by this rule change?

Idaho has provided Medicaid applicants with an additional ‘Asset Protection Tool’: the MCA simply through eliminating the interest rate requirement. Whether your clients are single or married, Krause Financial Services will have the right solution for your client’s needs.

2. How is the single Idaho Medicaid Applicant benefited? Can their assets now be gifted? Protected?

A single client can easily protect approximately half of their spend-down. They simply can transfer half of their resources as a gift to their beneficiaries and then use the other half of the assets to purchase a MCA.

The goals of the plan are:

(1) Get the client below $2,000 in resources

(2) Make immediate wealth transfer to heirs

(3) Structure MCA to provide income to pay nursing home during penalty period

(4) To qualify the client for Medicaid after the penalty expires

3. How do the Idaho Medicaid Rule Changes benefit your Community Spouse (CS)? Your Institutionalized Spouse (IS)?

The CS can immediately qualify the IS for Medicaid benefits by purchasing a MCA. Because the CS purchased the MCA, the income from the annuity will be payable to the CS. Our office recommends stretching the annuity over their life expectancy to maximize the Medicaid benefit, though, this is not required.

4. Does Krause Financial have short-term annuities? How short of an MCA can you get?

Yes! We have the ability to obtain a MCA with a term as short as 2 months. We do encourage longer terms on CS annuities, but the short-term annuity can be beneficial for your single Medicaid applicants.

5. How can Krause Financial Services help you?

Our dedicated team of Benefits Planners will be your guide to setting up your client’s MCA. We can provide you with annuity quotes, answers to planning questions, and even comprehensive annuity proposals for you and your clients to review. Krause Financial has more than 25 years of experience in the elder law field. We are the leading provider of MCAs in the country.

To speak to one of our Benefits Planners today, please email [email protected].

Or you may call our office at 1-866-605-7437.

We look forward to doing business with you in the near future.