The Top Five Medicaid Compliant Annuity Strategies
Disclaimer: Since Medicaid rules and insurance regulations are updated regularly, past blog posts may not present the most accurate or relevant data. Please contact our office for up-to-date information, strategies, and guidance.
Did you know there’s more than one way to structure a Medicaid Compliant Annuity (MCA)? The most beneficial MCA plan is one that’s tailored to your client’s specific needs and circumstances. Keep reading to learn our top five MCA strategies you need to keep in mind.
1. Traditional Community Spouse Plan
This is the simplest and most common MCA strategy we advise on. The community spouse funds the couple’s excess countable assets into an MCA that is owned by and made payable to them. This strategy can work with both qualified and non-qualified funds. Plus, the community spouse has flexibility in choosing either a short or long annuity term. We offer annuities as short as two months in most states.
2. Gift/MCA Plan
The Gift/MCA Plan is the most common MCA strategy for a single person. Rather than fund the entire spend-down amount into an MCA, the client uses the divestment rules to their advantage. They divest approximately half of their assets and use the other half to purchase an MCA that pays through the penalty period. Don’t worry””we will help you determine the most beneficial divestment and annuity amounts based on your client’s case facts.
3. “Name on the Check Rule”
While the Traditional Community Spouse Plan works for community spouses who own qualified funds, the strategy becomes more complex when it’s the institutionalized spouse who owns an IRA. In this case, the institutionalized spouse can convert their IRA to an MCA and designate the community spouse as the payee. Note this strategy doesn’t work in every state””contact our office for details.
4. MCA for the Institutionalized Spouse
Similar to the “Name on the Check Rule,” this strategy involves the institutionalized spouse purchasing the MCA. However, in this case, they remain the payee. The goal is to use this strategy to shift the annuity income to the community spouse under the Monthly Maintenance Needs Allowance (MMNA) rules. This strategy may be appropriate for lower-income clients. Plus, this option involves more favorable beneficiary rules than the Traditional Community Spouse Plan.
5. Standalone MCA Plan
As an alternative to the Gift/MCA Plan, single clients can also use the Standalone MCA Plan. This option involves funding the entire spend-down amount into an MCA with the goal of obtaining immediate Medicaid eligibility. Upon the client’s passing, the state Medicaid agency will recover their portion and the rest will go to the client’s beneficiaries. This option may be appropriate in states where the Gift/MCA Plan isn’t feasible or when dealing with a client who has a shortened life expectancy.
Regardless of the strategy you feel is most appropriate for your client, our team is here to help. We’ll provide a comprehensive proposal outlining the MCA plan and its economic benefits. The best part? All proposals and guidance are completely complimentary. Get started today by using our online intake form or contacting our office at [email protected].
As Marketing Director, Amy is responsible for all company communications and ensuring our clients have the most accurate and up-to-date information. In addition to her communication expertise, she has prior experience as a paralegal and a Krause Benefits Planner.
