Determining If a Medicaid Compliant Annuity Is Right for Your Client

As you integrate Medicaid Compliant Annuities (MCAs) into your business, one of the key challenges is identifying the right clients who can benefit from this innovative product. To help guide you, here are three essential factors to determine if an MCA is the appropriate solution for your client’s needs.

1. The client currently resides in a long-term care facility and plans to stay there indefinitely.

MCAs are intended for clients in crisis situations, such as those in a long-term care facility without prior planning or after exhausting their long-term care insurance (LTCI) or Medicare benefits. To be eligible, your client must be ready to apply for Medicaid immediately, meaning they should already be in a Medicaid-approved facility receiving ongoing care. Since MCAs are irrevocable and non-assignable, they are best suited for clients who are expected to remain in long-term care indefinitely. If their stay is temporary, an MCA may not be appropriate.

2. The client has exhausted their Medicare or LTCI benefits, if applicable, and is currently paying out of pocket for care.

If your client has exhausted their Medicare or LTCI benefits and is now paying out of pocket for care, they are at risk of rapidly depleting their savings to cover the high facility costs. In such cases, an MCA can be an effective solution. By converting excess countable assets into a Medicaid-compliant income stream, the MCA helps clients obtain financial assistance for long-term care, alleviating the financial burden on the client and their family. This allows them to preserve what remains of their assets, ensuring they have the support they need without sacrificing their financial security.

3. The client has assets to protect.

For an MCA to be beneficial, the client should have a significant amount of countable assets that they want to protect. The minimum investment required for an MCA is generally $5,000, but the assets must be liquid and readily accessible. If the funds are tied up in non-liquid investments like property, those assets would need to be converted to cash before they can be used to fund an MCA.

There’s no predetermined asset threshold that determines whether the client would benefit from an MCA, so if you’re uncertain whether an MCA is appropriate for your client, reach out to us! We can assist in evaluating the specific details of your client’s situation to help you decide.

Read More: How to Spend Down Assets for Medicaid

Alternatives for Clients Who Don’t Fit the MCA Profile

Not every client facing the high costs of long-term care will be a suitable candidate for an MCA. That’s why it’s important to have a diverse set of planning tools available. For clients in good health, long-term care insurance might be a better option. If a client has only a small amount to spend down, consider recommending a funeral expense trust.

If you’re unsure of the best direction for your client or want to explore different planning options, don’t hesitate to reach out to us. We’re here to help you provide the most appropriate solutions for your clients’ unique circumstances.