______________________

How to Use Community

Spouse Annuities

Larger Version

Medicaid Annuities: Pay for Long-Term Care Without Impoverishing Your Spouse

Written by: Attorney Jeffrey A. Marshall, CELA

About 70 percent of people age 65 or older will someday need long-term care services and supports. Unfortunately, the cost of that care is generally not covered by Medicare or other health insurance. It can easily bankrupt the care recipient and destroy his family’s financial security. It often does.

The Medicaid program is the most significant source of financial assistance for families struggling to meet the cost of long-term care. But, for an applicant to be eligible for Medicaid benefits, his assets must not exceed statutory limits.

Medicaid Protections for the Spouse

If the applicant is married, the resources of his spouse are considered in determining Medicaid eligibility. Fortunately, Medicaid law includes provisions intended to protect the spouse from financial ruin. These protections include a well-known standard, “community spouse resource allowance” (CSRA).

Less well recognized are protections that allow a well-advised spouse to retain financial resources in excess of the standard CSRA. Perhaps most significant are a complicated set of Medicaid provisions that allow the non-applicant spouse to protect excess resources through the purchase of a special type of so-called Medicaid annuity.

By purchasing a Medicaid annuity, a couple can spend down to the CSRA level and qualify immediately for Medicaid payment of long-term care costs. (Of course, the applicant must otherwise qualify for long-term care benefits under the program’s rules – such as level of care requirements.)

Some state Medicaid agencies don’t like Medicaid annuities. The annuities allow married couples to shift the cost of care to the state. In an effort to reduce state Medicaid expenditures state agencies will sometimes inappropriately deny benefits to an applicant whose spouse has purchased a Medicaid qualified annuity.

But the legality of purchasing a Medicaid annuity to protect excess financial resources has been approved by courts across the country. The federal rules require it, and states must follow those federal rules in this area of law.

A key case is establishing the annuity planning option was James v. Richman, 547 F.3d 214 (3d Cir. 2008), which I’m proud to say was handled by attorney Matthew Parker of my law office, Marshall, Parker and Weber. Later appeals court cases in other circuits include: Lopes v. Starkowski (2d Cir. 2012) and Morris v. Oklahoma Department of Human Services (10th Cir. 2012).

Recently, the United States Court of Appeals for the Eighth Circuit joined these other circuit courts in approving the use of Medicaid annuities. The case is Geston v. Anderson, decided September 10, 2013. The court’s opinion illustrates how couples can use Medicaid annuities to protect the future financial security of the spouse who does not need long-term care.

Learn more about the planning in Geston

Expert Guidance Needed to Use the Annuity Protections

Medicaid annuities are a wonderful planning tool for a married couple who have resources in excess of the standard Medicaid spousal allowance. It’s a pity that many couples are unaware of this option. In general, planning with Medicaid annuities is most beneficial for married couples. But there are even situations where this type of annuity can be beneficial for unmarried individuals as well.

It is critically important to get expert legal advice before engaging in Medicaid planning and purchasing an annuity. An ill-advised couple who purchase the wrong kind of annuity, or buy it at the wrong time (even if only by one day), will likely end up in a worse position than where they started. And that can easily happen if you don’t have expert guidance.

If you are a professional and would like to learn more about how these Medicaid Annuities can help your clients or patients, contact us.

 

   

Home | Disclaimer | Contact Us | Quote Request

Copyright 2010 PCM