With 2007 being a very successful year for Krause Financial Services, I would like to briefly outline the two techniques used in most of our Medicaid Compliant Annuity (“MCA”) sales:
In the individual cases - no community spouses, the respective elder law attorney developed a Gifting/Short-Term Medicaid Compliant Annuity Plan (“the Plan”) for his or her client. The Plan included an immediate gift amount, as well as a Short-Term MCA. The goals of the Plan were to make the Medicaid recipient immediately “otherwise eligible” - retaining less then $2,000.00 worth of countable resources, and to commence the divestment penalty clock on the immediate gift amount. With the divestment penalty period being established, and the divestment penalty clock running, the Medicaid recipient was determined to be economically eligible for Medicaid benefits following the termination of the divestment penalty period. Additionally, as a result of the Short-Term MCA, which has a duration equal to the divestment penalty period, the potential Medicaid recipient has sufficient monthly income in which to almost pay the private monthly rate of the nursing home - most cases were designed with a $25.00 - $50.00 monthly shortfall.
In the community spouse cases, with the spend-down amount being structured within a MCA for the benefit of the community spouse, the institutionalized spouse was immediately eligible for Medicaid benefits. In many of the cases, with the community spouse having the fear that any residual benefits remaining in the MCA following his or her death would escheat to the state Medicaid Program - to the extent of Medical Assistance benefits provided to the institutionalized spouse, the community spouse has opted to shorten the term of his or her MCA - to a period less that his or her Medicaid life expectancy.
