Annuities used to avoid Medicaid seizure and to protect assets are known as Medicaid annuities. Using annuities to do so is becoming increasingly popular. If one's assets exceed the Medicaid test limits then he/she may still be eligible for Medicaid by converting the assets to an annuity income stream that may be immediate or deferred.
According to Medicaid rules, an immediate annuity payable over the annuitant's life expectancy is not a countable asset. One using the annuity in this type of case should know about the rules and the requirements of state because generally the state's rules differ upto a great extent.
Opting Immediate annuity for Medicaid and Long-term Care Expenses:-
Immediate annuities have a feature that the annuitant can't revoke the contract and can't obtain a refund amount after the purchase of annuity except only the first 10 days, that are considered as free-look time period which is provided so that the owner could make a decision whether to refund or not. So immediate annuities are also defined as irrevocable contracts.
Here are some immediate annuity payment options:
(1) Period Certain : It is a guaranteed income over a period ranging from five to 30 years.
(2) Life Only or Single Life : life only or single life is a guaranteed income for the life of the annuitant.
(3) Single Life with Period Certain : It is a immediate annuity payment option that guaranteed income for the life of the annuitant and for a period ranging from five to 30 years.
(4) Joint and Survivor : It is a guaranteed income covering two or more lives (usually the investor and spouse) and continuing as long as any one of the annuitants survives.
"Life only" annuities are more suitable and mostly advised for Medicaid planning purposes if the annuitant is married and have no heirs and if having heirs then if the heirs have been given other assets.
Opting Deferred Annuities for Medicaid and Long-term Care Expenses:-
Fixed deferred annuity is also purchased as the annuity for Medicaid and long-term care expenses. A fixed deferred annuity is a annuity in which their is a contract between the annuitant and the insurance company for a guaranteed interest bearing policy with guaranteed income options. The fixed deferred annuity is also known as tax-deferred annuity. In this annuity the insurance company credits the interest and the owner is not liable to pay or don't pay any tax on the earnings until and unless he/she doesn't withdraw the amount or start receiving any annuity income.
Fixed deferred annuity are also like other annuities that offer the tax-deferred advantage and help one to accumulate money for retirement.