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  • Writer's pictureAmber Hinds

The Pros and Cons of Medicaid Compliant Annuities

As the cost of long-term care continues to rise, many families are turning to Medicaid as a way to pay for their loved one's care. However, to qualify for Medicaid, individuals must meet certain income and asset requirements. This is where Medicaid compliant annuities come in - they can be a useful tool for families looking to protect their assets while still qualifying for Medicaid benefits. In this blog post, we will explore the pros and cons of Medicaid compliant annuities.


Protection of Assets: One of the main advantages of Medicaid compliant annuities is that they can help protect your assets. By converting assets into an annuity, those assets are no longer considered countable assets for Medicaid eligibility purposes. This means that you can qualify for Medicaid benefits while still preserving some of your assets for your heirs.

Guaranteed Income: Medicaid compliant annuities offer a guaranteed stream of income for the life of the annuity. This can provide peace of mind for individuals who are concerned about running out of money to pay for long-term care expenses.

Tax Benefits: Medicaid compliant annuities offer tax benefits, especially when funded with IRAs or other retirement accounts. The income from the annuity is tax-deferred until it is paid out, which can reduce your tax liability.


Irrevocable: Once you purchase a Medicaid compliant annuity, it is irrevocable. This means that you cannot change your mind and cash it out. Additionally, you cannot name new beneficiaries.

Limited Options: Medicaid compliant annuities are typically only available as fixed annuities, which may not offer the same returns as other investment options. Also, there are a limited number of insurance companies that offer MCAs.

Processing Fees May Apply: If the annuity term chosen is considered to be “short-term” in payout, there may be processing fees due in order to issue the annuity.

In conclusion, Medicaid compliant annuities can be a useful tool for families looking to protect their assets while still qualifying for Medicaid benefits. They offer a guaranteed stream of income and tax benefits. However, they are irrevocable and have limited investment options. It is important to carefully consider all of the pros and cons before purchasing a Medicaid compliant annuity. As always, we recommend speaking with an attorney and/or an advisor who specializes in long-term care planning to determine the best solution for your unique situation.

If you're an attorney or financial advisor interested in learning more about Medicaid compliant annuities and whether they're the right option for your client, we encourage you to speak with one of our knowledgeable insurance specialists at Ashber. We can help answer any questions you may have and provide guidance on the best options available to you. To get started, simply fill out our easy quote form on our website at We look forward to hearing from you soon!

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