Using an Annuity to Keep the Spouse of a Medicaid Applicant from Becoming Impoverished

When one spouse qualifies for Medicaid to pay for a nursing home stay, the spouse who is at home is often left without many resources. While Medicaid has rules to prevent community spouses from impoverishment, the protections aren’t always enough. There are steps that you can take to increase the community spouse's income, and as a recent case illustrates, an annuity may be a good option.

In order to qualify for Medicaid coverage, the applicant can have no more than $2,400  or $8,000 in resources depending on the applicant's gross income. In general, the community spouse may keep one-half of the couple's total "countable" assets up to a maximum of $128,640 (in 2020). Called the "community spouse resource allowance," this is the most that a community spouse can retain without a hearing or a court order. The least that a state may allow a community spouse to retain is $25,728 (in 2020).

One way to ensure that the community spouse has enough money to live on is for the community spouse to purchase an annuity. By purchasing an annuity, the spouse turns a countable resource into an income stream for the community spouse. Since the community spouse's income is not required to be used to pay for long term care of the applicant, it does not disqualify the applicant from Medicaid benefts. The annuity must meet certain qualifications in order to not be considered an asset transfer, including be irrevocable and name the state as a remainder beneficiary. 

This is a complicated planning technique and should not be undertaken without advice and assistance from a qualified certified elder law attorney. After a thorough review of your circumstances, the CELA can guide you through this difficult procedure step-by-step and ensure that you are choosing the best way to protect Medicaid benefits and the community spouse. 

Contact us


401 S. Market Street | BLOOMSBURG , PA 17815
Phone: (570) 784-5211