Preparing to go into a nursing home is often a stressful and emotionally charged time of life. Figuring out how to pay for a nursing home and how to manage your lifetime savings can be very stressful. If you are worried about paying for your loved one’s care and spending all your savings on nursing home expenses, there are cost-effective ways to plan for long-term care with immediate annuities, especially when paired with Medicaid. Here are some tips on how you and your spouse can use annuity settlements to preserve your finances in spite of large nursing home bills.

Immediate Annuity and Medicaid

An instant annuity can be a valuable resource in Medicaid planning because most states limit the amount of resources owned by Medicaid applicants to just $2,000. This includes resources that are owned by both spouses. However, income is typically only counted if is payable to a Medicaid applicant, not an unnamed spouse.

Annuities can provide a monthly stream of income to the applicant’s spouse that is not counted towards Medicaid eligibility. Therefore, couples can use annuities to “deplete” one couple’s visible assets by turning annuity income into spouse income. This is commonly referred to as a single-premium immediate annuity.

How Immediate Annuities Work

Single-premium immediate annuities are paid for with a lump sum payment that begins paying the premium back to the annuitant right away. This is a different kind of annuity than the ones that are used for long-term investment purposes.

An immediate annuity doesn’t violate Medicaid laws because the money is being spent on something of equal value and is not considered a gift that might disqualify someone from being eligible for Medicaid. While a spouse receives individual monthly annuity checks, the Medicaid applicant spouse’s eligibility isn’t affected.

Annuity Settlements and Long-Term Care

Annuity settlements can assist couples in paying for long-term care, as well as help them make smart financial decisions for their future. Not only can annuity payments help you prepare for possible nursing home expenses, but payments can also be sold for lump sum cash if you need funds right away.

Looking for More Information on Immediate Annuities?

At Novation, we buy annuity payments to help you take control of your financial future. The experts at Novation are here to listen, so contact us today for a free quote.

*Novation is not a financial advisor or consultant and strongly recommends that you speak to a lawyer or accountant before making any significant financial decisions.