Navigating Gift & Annuity Law In Pennsylvania
Because Medicaid requires that a person receiving benefits must be unable to afford them, it can sometimes be necessary to place assets into the care of others. One strategy is through gifts and annuities, where a person can rearrange their money and other assets in Medicaid-approved ways. At Marks Elder Law, we understand how to help Pittsburgh residents qualify for long-term care coverage.
How Gift & Annuity Strategies Protect Assets
In order to protect your assets, you must follow certain regulations. If a gift is given in the wrong way, it works against you. No matter what you decide, it is always worth speaking with a Pittsburgh estate planning, probate and elder law attorney.
The steps to implementing a gift and annuity strategy include:
- Making a gift of some of your assets – The first step is to make a gift to a child or other trusted person of usually over half of your estate’s financial assets viewed by Medicaid as “available resources.” While this will result in a period of ineligibility, the next steps will result in Medicaid benefits for you as soon as possible.
- Purchase a Medicaid-qualified immediate annuity – An immediate annuity is an investment that pays you back a series of regular payments beginning right away, instead of having the investment grow in value. This converts excess assets into income that you can use to pay for your care each month so you will be able to qualify for Medicaid sooner.
- Apply for Medicaid – Because a gift has been made, Medicaid will assess a penalty period of ineligibility based on how much longer that gift money could have paid for your long-term care. The immediate annuity pays income back to you during that period to pay for your costs of care until you become eligible again for benefits. After that, Medicaid will cover all your nursing home expenses, and the gifted money is still held safely for you by your trusted helper.
What Else Should You Know About This Strategy?
This strategy can and should only be used once you have become eligible for nursing level care. Prior to that, it will not be of any use. Not all assets can be protected this way either. It is important to consult with an experienced Monroeville estate planning lawyer to assign a trustworthy custodian for your assets.
Gift and annuity strategies help you save money by not spending all your excess income on medical care and instead entrusting it with someone else. This can result in substantial savings for you and your family and can preserve the financial integrity of your estate. While it will take considerable planning, a gift and annuity strategy is one of the best ways for a single, unmarried person to save more of their money.