Annuity to Fund a Personal Services Contract
A Personal Services Contract (PSK) is often used as a spend-down tool for Medicaid eligibility. If used alone, a PSK poses three non-Medicaid problems:
(1) Excess income taxes;
(2) Loss of control; and
(3) An unequal inheritance.
The caregiver is the owner and payee of the policy, and the care recipient is the annuitant. In some cases, an insurance company will not allow the owner and annuitant of a contract to be separate individuals. In those situations, the caregiver is also the annuitant of the policy. This product/strategy is widely used in Florida.