It’s a daunting task when your spouse enters a nursing home for long-term care, especially considering all of the logistical nightmares and care coordination concerns that are part and parcel of such a move. Throw in financial planning for Medi-Cal eligibility and you’ll be subject to even more stress since there are strict asset and income limits that must be met by both spouses to receive the long-term care benefits. However, planning with an experienced Torrance elder law attorney can help relieve some of this stress, as they can advise you on the best course of action and give you financial strategies that will help you qualify for benefits. One of these strategies may be to use annuities.
There are two factors that make planning for Medi-Cal with annuities a viable strategy:
- A large amount of cash is used to purchase an annuity, which then guarantees income payments over a person’s lifetime.
- The spouse in need of long-term care must adhere to strict income and asset limits, but the healthy spouse (i.e., the one that does not need long-term care) is only held to an asset limit, with no cap on the amount of income this spouse can earn.
The equation is simple: the spouse in need of care purchases an annuity with their own assets to be used as income for the healthy spouse.
Of course, if it was that easy, everyone would do it. The truth is that planning for Medi-Cal eligibility with annuities can be a bit more complicated than that. For example, the annuity payments must be made in total before the end of the healthy spouse’s life expectancy, and the state must be named as the primary beneficiary of the annuity after the healthy spouse. The reason for this is to ensure that the remainder of the annuity payments go back to the state to repay the Medi-Cal benefits. In addition, the annuity must be purchased commercially; a private annuity agreement between family members is grounds for disqualification from Medi-Cal eligibility.
On top of this, there are several other rules and regulations to keep in mind when planning for Medi-Cal coverage with annuities. These include transfer, revocation, the term of payments and the life expectancy of the well spouse, and the amount of money in each monthly annuity payment. It’s best to consult with an experienced Torrance elder law attorney who knows how to work with annuities to successfully plan for Medi-Cal eligibility.
If you would like to learn more about using annuities to plan for Medi-Cal eligibility, or if you’d like to discuss different ways to plan for Medi-Cal eligibility in the future, please contact us at (310) 782-6322 to set up an appointment.