To qualify for Medicaid, a Federal program wherein the government pays a portion if not all of an elderly patient’s long-term care costs, an applicant cannot own more than $2,500 in countable assets.

When one member of a married couple receives Medicaid while the other remains at home, they can keep a “Community Spouse Resource Allowance” comprised of the couple’s total assets excluding their house so long as its equity value does not exceed $585,000. The current CSRA is $126,420.

In order to prevent abuse of the program, an applicant may be subject to a period of ineligibility if they or their spouse transfer assets within five years of filing.

However, there are several financial strategies which allow an applicant to “spend down” or shelter their assets without incurring a penalty or sacrificing any of their value.

For example, if it meets certain criteria, an applicant’s spouse can purchase an immediate annuity.

This contract with an insurance company guarantees a stream of income for a fixed set of time, or for life, in exchange for an upfront sum. In order for an immediate annuity to avoid incurring a period of ineligibility for Medicaid in Maryland it must:

• Pay back the entire investment during its fixed time
• Have a payment period shorter than the owner’s actuarial life expectancy
• Be irrevocable and nontransferable
• Name the state as the beneficiary of the annuitant dies before all payments are made

Immediate annuities may seem like a simple cure all to couples seeking Medicaid but who possess too many assets, there are however several things to keep in mind.

Each state is different.

Depending on where a person lives they may still incur a penalty if they transfer assets using an immediate annuity. In addition, the requirements the contract must meet can vary from state to state.

Every person’s situation is also different.

Purchasing an annuity might not be the best option available in an individual situation. For example, transferring assets to an exempt beneficiary or exploring community Medicaid may also allow a patient’s long-term care needs to be met while maintaining their assets.

The number of available options and the dire consequences for small mistakes leave Medicaid one of the most complex fields of Elder Law.

For assistance with qualification, application, or any other aspect of the process contact Abraham & Bauer today.

Planning ahead is a gift to your loved ones!

Richard K. Abraham, Esquire

Mr. Abraham is an experienced attorney and founding member of the Law Office of Richard K. Abraham. The Sparks, MD office of the firm concentrates its practice in Estate Planning, Elder Law, Probate, Medical Assistance (Medicaid), Guardianship, Asset Preservation and Fiduciary Representation.

He is an active member in a number of professional organizations that focus on law, the senior community, and estate planning. He works with clients in Central Maryland, especially in Towson, Hunt Valley, Lutherville/Timonium, Parkville, White Marsh, Bel Air & Northern Baltimore City.

Schedule a consultation to help you and your loved ones.