Session 3: Medicaid Compliant Annuities

This presentation provides a structured, practice-oriented overview of
Medicaid-Compliant Annuities (MCAs) as a planning tool to
accelerate Medicaid eligibility while protecting assets, with a focus on
Maryland and Washington, DC rules.

The session begins with a refresher on Medicaid eligibility fundamentals and
then walks through MCA requirements, funding mechanics, and two detailed case
studies—one involving a married couple and one involving a single individual.

Medicaid Eligibility Framework (Context)

The presentation reviews the core non-financial and financial eligibility
rules relevant to long-term care Medicaid, emphasizing the
institutionalized spouse / community spouse distinction.

• Medicaid is a joint federal–state program with state-specific rules.
• Non-financial eligibility requires citizenship or qualified status,
  age/disability, and residence in a Medicaid-approved facility.
• Income rules differ sharply between the institutionalized individual and the
  community spouse, including application of the
  Monthly Maintenance Needs Allowance (MMNA).
  • Washington, DC uses a standard MMNA of $2,643.75.
  • Maryland applies a minimum/maximum MMNA framework.
• Asset rules include the Individual Resource Allowance
  (higher in MD and DC than in many states) and the
  Community Spouse Resource Allowance (CSRA), subject to
  minimum and maximum limits.
• The distinction between exempt and
  countable assets is critical to planning, particularly with
  respect to IRAs, annuities, and real property.

What Is a Medicaid-Compliant Annuity

A Medicaid-Compliant Annuity (MCA) is presented as a
single-premium immediate annuity that includes specific
restrictions designed to comply with Medicaid requirements.

The slides emphasize that a properly structured MCA:

• Converts excess countable assets into an income stream
• Has no cash value
• Can accelerate Medicaid eligibility while protecting assets for the
  community spouse or during a penalty period

Core MCA Requirements

To be Medicaid-compliant, an annuity must meet all of the following conditions:

• Irrevocable – the terms of the annuity cannot be altered
• Non-assignable – the annuity cannot be transferred or sold
• Actuarially sound – the annuity term must be equal to or
  shorter than the owner’s Medicaid life expectancy
• Equal payments – no deferral, balloon, or back-loaded
  payments are permitted
• State as beneficiary – the state Medicaid agency must
  generally be named primary beneficiary to the extent of benefits paid,
  subject to limited exceptions

Failure to meet any of these requirements risks treatment of the annuity as a
countable asset or an improper transfer for
Medicaid eligibility purposes.