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When can certain annuities be used in Medicaid planning?

Many people in New Jersey may have decided that they will rely on Medicaid in part to fund their stay in a nursing home, should they need such services in their old age. However, to do so, a person's countable assets cannot be valued above a nominal level, which is quite low. Most people do not want to impoverish themselves or deplete their estate, just to be able to afford nursing home care. Fortunately, people in such situations have asset protection options, and one of these options may be a Single Premium Immediate Annuity.

An SPIA can help a person keep assets to pass on to loved ones while still qualifying for Medicaid benefits. SPIAs are counted as a separate source of income for purposes of calculating countable assets for Medicaid eligibility purposes. This means that funds in a SPIA need not be liquidated, and thus, can eventually be used by a spouse or passed on to loved ones.

However, if a person wants to obtain a SPIA, they must plan ahead. This is because a SPIA cannot be purchased after a spouse is already in a nursing home. If so, it is no longer protected by the Community Spouse Resource Allowance rules that permit spouses in need of nursing home care to set aside a certain amount of assets for their healthy partner without it counting towards their countable assets for Medicaid qualification purposes.

In the end, it is important to remember that there are many rules and laws surrounding Medicaid eligibility and SPIAs.

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