Even though it’s better to plan ahead for MassHealth, you can try to qualify for MassHealth last-minute by using an annuity. MassHealth (Medicaid in MA) can help seniors with the cost of long-term care, which is extremely expensive in Massachusetts.
Seniors who need long–term–care services can qualify for MassHealth (Medicaid in Massachusetts) to help cover those expenses by meeting strict income and asset limits. The applicant can have only $2,000 in countable assets in their name. If their spouse plans to continue living in the community, the spouse is allowed to keep approximately $137,400 in their name. If they have too many assets, they have to spend down their assets according to MassHealth rules. But that doesn’t leave the community spouse a lot of money to live on.
What is an Annuity?
An annuity is a financial contract made between a person and an insurance company. The person gives the company a lump sum of cash. That money is then converted into steady, equal payments to the person via a monthly check for a specified period of time (within the life expectancy of the insured person) or for the life expectancy of that person.
An Immediate Annuity
An immediate annuity is a MassHealth compliant annuity that allows the MassHealth applicant’s spouse to take assets that would normally count towards the MassHealth asset limit and turn them into non-countable assets. With an immediate annuity, the community spouse begins to receive income payments no later than one year after the lump sum is paid. The immediate annuity is irrevocable (can’t be canceled or cashed in), is non-assignable, has no deferral or balloon payments, and must be actuarially sound (meaning it must be scheduled to be repaid within the life expectancy of the insured party).
Jan (age 75) and Bob (age 78) have investments worth $250,000. Jan suddenly needs to enter a nursing home. The total amount allowed to be kept by the couple under MassHealth is $139,400 ($2,000 for the applicant and $137,400 for the spouse); the rest will have to be spent on medical care before he will qualify. Could they qualify for MassHealth last-minute by using an annuity? Yes, Bob could purchase an immediate annuity for the remaining assets ($110,600) to be paid within four years, which is within her life expectancy. This will give Bob a steady monthly income payment which will be protected from Jan’s medical expenses.
MassHealth must be named as first remainder beneficiary (the party chosen to receive funds from an annuity after the person who bought the annuity passes away), so it can be reimbursed for the MassHealth benefits it paid out for the spouse. After MassHealth is paid, the remaining funds can be paid to other remaindermen. With this in mind, a shorter-term annuity may work best.
As a Massachusetts elder law attorney, I can help you find out whether an annuity would be a helpful planning tool for MassHealth for you or a loved one. Please contact us today for your free, no-obligation consultation.