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Medicaid Compliant Annuities
A recent court case, Hutcherson v. Arizona Health Care Cost Containment System Administration ("AHCCCS"), brought a ruling down regarding the State's recovery rights as a beneficiary of a Medicaid Compliant Annuity. Within the decision:
"We hold that the 2006 amendment to 42 U.S.C. § 1396p(c)(1)(F)(i) creates a right in the State to recover as a remainder beneficiary against a community spouse's annuity for an institutionalized spouse's medical costs. We further hold that the St ...
Many elder law practitioners that utilize Medicaid Compliant Annuities in their planning are familiar with J.G. Wentworth proclaiming their ability to purchase any annuity - regardless of the provisions.
We all know that a Medicaid Compliant Annuity cannot be sold under any circumstances. The insurance company will refuse to honor any requests regarding change in ownership, annuitant, payee, or beneficiary. This is because a Medicaid Compliant Annuity is irrevocable and non-assign ...
"If a single person buys a Medicaid Compliant Annuity to provide income during a disqualification period, and the state Medicaid agency is designated as the primary beneficiary, what if the individual predeceases the annuity?"
This is an excellent question that I receive quite often in the Ask Dale forum. Krause Financial Services has a vast amount of experience with individuals predeceasing their Medicaid Compliant Annuities, and has worked with many states' Medicaid agencies in m ...
Medicaid planning with IRAs typically involves a considerable amount of caution due to the heavy tax consequences and penalties that can result from careless errors. The same holds true for both preplanning and crisis Medicaid planning. In preplanning, the tax-qualified funds cannot simply be transferred into a trust, and in crisis Medicaid planning the funds cannot simply be co-mingled with other post-tax countable resources in spend-down strategies. So where does that leave ...
In March of 2010 the National Association of State Medicaid Directors ("NASMD") wrote a letter to the Center for Medicaid and State Operations ("CMS") regarding the inappropriate use of short-term Medicaid Compliant Annuities. If you recall, NASMD requested that CMS take the position that a Medicaid Compliant Annuity purchased by a community spouse "should be treated as a trust-like device, and that the entire amount used to purchase the [Medicaid Compliant Annuity] should be counted in ...
Does an annuity utilized in VA planning have to follow the same guidelines as that of an annuity utilized in Medicaid planning (i.e. irrevocable, non-assignable, zero cash value, etc.)? I hear this question quite often, which is completely understandable - the VA does not provide for specific annuity requirements, unlike Medicaid.
Notwithstanding the above, the VA program does not require that an immediate annuity contract be compliant with the Deficit Reduction Act of 2005 in order to ...
In many states, an IRA owned by the community spouse is a countable resource for Medicaid purposes. In order to protect the account from a Medicaid spend-down and qualify the institutionalized spouse for Medicaid benefits, the community spouse will be advised to purchase a Medicaid Compliant Annuity. The purpose of the Medicaid Compliant Annuity is to convert a pile of cash (the IRA) into a monthly stream of income. Once annuitized, the community spouse is no longer over-reso ...
Yes, a tax-deferred annuity can easily be converted into a Medicaid Compliant Annuity.
If the current carrier does not provide a Medicaid Compliant Annuity, the tax-deferred annuity can be "transferred" to the desired carrier by way of a 1035 exchange.
A 1035 exchange refers to the section of tax code that allows investors the flexibility to exchange one annuity for another without incurring any immediate tax liabilities. Generally, the surrender of an existing insurance contract is a ...
The majority of elder law attorneys are very familiar with the Deficit Reduction Act of 2005 ("DRA"); however, I have found that much confusion still surrounds the requirements regarding designating the state Medicaid agency as a beneficiary of a Medicaid Compliant Annuity.
While Krause Financial Services rarely experiences an annuitant predeceasing the term of his or her Medicaid Compliant Annuity, in the rare occurrence of a premature death, if the designation is not correct the result ...
The annuity planning that Krause Financial Services provides in VA scenarios is not to be confused with the planning provided by many self-dubbed "VA Planning Specialists" that have recently created quite the reputation. I always advise that an applicant seek the counsel of an accredited elder law attorney prior to proceeding with any type of plan. Furthermore, I do not advise that the applicant and/or the applicant's family utilize annuity products with inappropriate features - no ...
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