Ohio Medicaid – Eligibility Procedure Letter No. 112

We know that when a spouse enters a nursing home, you have to spend down almost all of your assets to qualify for Medicaid. But what if there was another option on how you might be able to save thousands of dollars from your retirement investments yet still meet Medicaid qualifications.

Before we talk about this new option we will first cover how to qualify for Medicaid
To qualify for Medicaid you have to spend down your assets to $1,500. But there are exclusions to what has to be spent down. For married couples, you can still keep:
– Your home that you live in
– One automobile
– Household goods and personal property
– Irrevocable funeral trusts and prepaid burial contracts
– 50% of your financial assets up to max of $119,220, anything after that would have to be spent down.

These financial assets also include our IRA’s and 401K’s but until recently you had to spend down your qualified retirement accounts before you were eligible for Medicaid. The most common way couples did this was to use their retirement accounts to pay the nursing home bills. So let’s say you had a $200,000 IRA or 401K and the nursing home cost was $10,000 per month you could use up your IRA of 401K in less than 2 years.

But that has changed thanks to Ohio Medicaid Eligibility Procedure Letter No. 112, we can now use a Medicaid Compliant annuity to convert the IRA or 401K to an income stream with the goal of immediately qualify for Medicaid and have Medicaid pay all or most of the nursing home costs.

A Medicaid compliant annuity is a contract with an insurance company that converts financial assets into an income stream.

But you can’t use just any annuity. Per the State of Ohio Administrative Code the annuity has to have these attributes.
– Irrevocable – can’t change or surrender the annuity for value
– Non-assignable – can’t assign to a 3rd party
– Actuarially Sound – annuity payments up to the person’s life expectancy
– Equal Payments – monthly income payments, same amount each month
– State of Ohio as beneficiary – but only up to recovery costs for care provided by the nursing home.

Also keep in mind that the higher your income, the less you can save.

What if the spouse dies in the nursing home, does the State of Ohio get all of their annuity payments or death benefit? No, first in line is the surviving spouse and depending on the annuity, payments will continue to the spouse. The whole goal here is to help the surviving spouse stay in their home and community they love.

What if we already own an annuity are we covered? Not necessarily, the annuity has to comply with the Ohio Administrative code; if not, the funds would have to be transferred to a Medicaid compliant annuity.

Here’s an easy way to tell if the annuity you own is Medicaid compliant. If it allows for a change of beneficiary it is NOT Medicaid compliant.
The above information deals with married couples. The rules and strategies are different for single people, but they can save a lot of money as well.

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