A VA Annuity is a Single Premium Immediate Annuity (SPIA) that offers zero cash value and provides income to the owner. Beneficiaries are assignable and revocable. Because the product is flexible, it will not jeopardize future planning options.
The revolutionary aspect of this product is that should nursing home care become required, the annuity can easily be converted to comply with Medicaid regulations. At any time, the owner may add a "restrictions endorsement" to make the annuity irrevocable, non-assignable, and name the state Medicaid agency as beneficiary. These adjustments turn the VA annuity into a Medicaid Compliant Annuity.
Balloon Style VA Annuity
In this case study, we will show you how to obtain financial assistance for Mark to supplement his care costs through the VA Aid & Attendance program through the use of a balloon style VA annuity.View Case Study
Level-Pay VA Annuity
For this case study, we will show you how to utilize a level-pay VA annuity to obtain financial assistance for George and help supplement his care costs through the VA Aid & Attendance program.View Case Study
The 2018 Veteran’s Pension Rates are as follows. If you have any questions, please let us know.
The VA Annuity is available for terms as low as two months. Only $5,000 is required as a minimum investment and issue is available for ages 0 to 100. The VA annuity may also be purchased with tax-qualified funds.
The VA annuity is available in the following states: Alabama, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
For a veteran or his/her surviving spouse to be qualified for the non-service connected Aid & Attendance pension, the veteran must have served 90 days active duty, with at least one day during a wartime. Additionally, the veteran must have received a military discharge other than dishonorable.
Types of Military Discharges in order: Honorable, General, Other than Honorable, Bad Conduct, and Dishonorable.
Official War Periods
In order to be eligible to qualify for the VA Aid & Attendance program, a veteran must be permanently and totally disabled, in need of daily aid and attendance by another person, have “low monthly income”, must have recurring medical expenses that exceed their monthly income, have “nominal assets” (low net worth).
While there is no explicit limit on the net worth, a claimant may have, we recommend the client retain no more than $20,000-$30,000 depending on marital status and age.
A Level-Pay VA Annuity is the most common type of annuity used in VA planning. The purpose is to convert excess net worth into a moderate stream of income. The excess net worth is immediately eliminated, and the owner receives sufficient income (both from the annuity and the VA benefit) to cover their monthly care costs.
The goal in VA planning is to maintain a negative IVAP. As such, the term of the annuity should be structured in a manner that, when combined with the person’s current monthly income, their total income does not exceed their UMEs. It is recommended the term length does not exceed the person’s Medicaid life expectancy in case the annuity needs to be converted to be Medicaid compliant in the future. The Level-Pay Annuity can be funded with either non-qualified or tax-qualified funds.
In cases where using a Level-Pay VA Annuity structured over the individual’s Medicaid life expectancy would still create a positive IVAP, the person could consider using a Balloon-Style VA Annuity as well.
This annuity converts excess net worth into a minimal stream of income. Payments throughout the term of the annuity are very small, except for the final payment (the “balloon” payment), which is very large. Prior to receiving the balloon payment, the owner can elect to continue/rollover the contract. If they are still receiving VA benefits at that time, this will prevent them from jeopardizing their eligibility.
The Balloon-Style VA Annuity is typically used in conjunction with a Level-Pay VA Annuity, each being funded with a particular investment amount in order to create the perfect amount of monthly income being received. Between the two annuities, the excess net worth is immediately eliminated, and the owner receives sufficient income (both from the annuity and the VA benefit) to cover their monthly care costs. At this time, the Balloon-Style VA Annuity can only be funded with non-qualified funds.