UPDATE - Medicaid Planning - Annuities
A new rule, effective September 1, 2005, adds an additional requirement to the use of an annuity in Medicaid planning. An annuity can be a useful tool for married couples when one spouse needs long-term nursing home care. The annuity may allow a couple to "convert" assets which might otherwise disqualify them from Medicaid eligibility by turning them into an income stream for the well spouse.
Formerly, to qualify for Medicaid, an annuity had to be:
- immediate,
- irrevocable,
- non-transferable, and
- actuarially sound.
Actuarially sound means that the annuity must have a term certain - a guaranteed number of years of payment - that will not exceed the annuitant's life expectancy as determined by the Life Expectancy Table published by the Michigan Department of Human Services. The new rule now requires that the annuity payments be substantially equal monthly payments. This eliminates annual and balloon annuity pay-out options as a Medicaid planning tool.
For your reference, we are enclosing a copy of the Life Expectancy Tables used by the Michigan Department of Human Services. Additionally, we are providing a Medicaid Reference Checklist as to the Medicaid laws. These numbers change and you should consult the Program Eligibility Manual for verification.
Smith Bovill, P.C. counsels clients on elder law and Medicaid planning issues regularly as part of its estate planning, probate, and trust administration practice. Please check our web site for any updates to the newsletter and additional information regarding elder law. This letter, and the information on our web site, is intended to be for informational purposes only. As a result of the constantly changing laws in the Medicaid area, the information provided may change. We would be pleased to discuss this, or any other Medicaid or elder law issues in more detail.
| ANDREW D. RICHARDS | SHARON A. BURGESS |
| SMITH BOVILL, P.C. | SMITH BOVILL, P.C. |
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Smith Bovill, A Professional Corporation
| 200 St. Andrews Road
Saginaw, MI 48603
Phone: (989) 792-9641
Fax: (989) 792-1116 | 140 West Tuscola Street, Suite B
Frankenmuth, MI 48734
Phone: (989) 652-9923
Fax: (989) 652-3607 |
The law offices of Smith Bovill represent clients throughout Michigan including Mid-Michigan, The Michigan Thumb, Arenac County, Bay County, Genesee County, Huron County, Isabella County, Lapeer County, Ogemaw County, Roscommon County, Saginaw County, Sanilac County, Shiawassee County and Tuscola County as well as the cities of Saginaw, Frankenmuth, Bay City, Cheboygan, Flint, Gaylord, Grayling, Midland, Mount Pleasant, and West Branch.
