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Medicaid annuities might help Texas senior citizens

For some senior citizens, getting adequate medical care means having to qualify for Medicaid. In some cases, this will take planning because of the qualification guidelines for this government paid health insurance. Our Texas readers who are growing older and their adult children should understand some points about the Medicaid system and how Medicaid planning works.

When a person has more assets than what is allowed by the Medicaid system, they have to determine what to do with those assets. There are three options to consider. One of those is giving the overage away as a gift. That option, however, will initiate a period of ineligibility for the person. For that reason, many people choose to bypass this option.

A second option is to spend the overage until the assets are valued below the limit. That option, however, isn't a viable one for many people. It also isn't the best option.

A third option is to convert the assets to ones that can't be counted for Medicaid purposes. Even this has some caveats. One caveat is that the asset has to be converted into an annuity, also known as a Medicaid annuity, which is a series of payments made to you in exchange for the asset.

An annuity can be for a guaranteed period or for life. Most people opt for a guaranteed period so that the annuity will be paid to heirs upon their death. A life annuity would stop when you pass away, even if that is only months or a couple of years into the annuity payments.

The guaranteed period can't be too long, however. When considering the terms for a guaranteed payment annuity, the period must be less than the life expectancy for a person of the same age. That means that a 70-year-old man would have to stick to a guaranteed period of 12.8 years or less because that is how long Medicaid rules expect him to live.

A final consideration is that only commercial annuities are considered as non-countable assets by Medicaid. This means that you can't allow a family member to pay you an annuity as a way to recoup money from your assets.

As you can see, this is a complex proposition with a lot of variables. Seeking help to understand your options and how they affect your eligibility can help you decide what to do.

Source: AgingCare.com, "How Can My Elderly Parent Qualify for Medicaid?" K. Gabriel Heiser, accessed Feb. 27, 2015

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