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How can I apply to ALTCS if I am over the asset limit?
Many Medicaid Long Term Care (ALTCS) applicants mistakenly believe that if they are over the asset limit of $2,000 they will not be able to qualify for the ALTCS benefit. As a solution, people generally spend down their funds on care-related costs until their savings dip below the $2,000 threshold. While this is one way to qualify, this is not the only way.
Senior Planning can help you qualify for ALTCS without completely depleting your savings. The way we do this is through what is called a single-premium immediate annuity (SPIA), which is a Medicaid compliant annuity. A Medicaid annuity takes any amount of savings and turns it into a monthly income stream for the spouse who does not need care, also known as a community spouse. This method will preserve the funds, distributing them to the community spouse for years to come, preventing them from suffering financial hardship.
How does an annuity work?
Let’s say a couple has $50,000 in savings, which puts them far above the ALTCS limit of $2,000 in assets. They don’t want to spend down until they reach $2,000 or less and would rather use the money to benefit the community spouse. The first step is to move the total savings into the community spouse’s name. This is not considered a gift because the spouse applying for ALTCS is allowed to transfer assets to their spouse. Next, the community spouse must buy the single-premium immediate annuity (SPIA) mentioned above, and this is where Senior Planning comes in. We work with commercial insurance companies to provide SPIA annuities to our clients. The annuity will be in the name of the community spouse and since it is an immediate annuity, monthly payments will begin right away.
How come annuities don’t interfere with ALTCS rules?
Since the money is being spent on something of equal value, annuities are not considered a gift, a transfer, or an asset. Even if the community spouse saves money from the monthly annuity payment, it does not jeopardize the Medicaid spouse’s eligibility. Once qualified, the Medicaid spouse just has to show that they do not have more than $2,000 in assets at any given time.
Don’t Forget, the Following Terms Must be met:
- The annuity has to be issued through a commercial insurance company.
- The annuity has to be immediate and irrevocable.
- The annuity has to be non-assignable and nontransferable.
- The monthly payments must be in equal distributions and it must be expected that the annuity will run out within the community spouse’s lifetime.
- ALTCS must be designated as the beneficiary of the annuity in the event of the community spouse’s death.