123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Investing---Finance >> View Article

Medicaid's Treatment Of Ira Annuities

Profile Picture
By Author: Dale Krause
Total Articles: 15
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

In most states retirement accounts and retirement annuities are treated differently for Medicaid purposes. A retirement account will traditionally be considered under the retirement asset rules, and applied to eligibility accordingly. A retirement annuity will traditionally be considered under the annuity rules, and applied to eligibility accordingly. In short, the investment vehicle is first considered, and then the tax status of the funds held inside.

A retirement account will either be considered a countable resource or exempt asset, sometimes depending on whether the required minimum distributions are being taken and whether the account is owned by the Medicaid applicant or the community spouse. A retirement annuity usually must abide by some, but not all, of the legislation outlined in the Deficit Reduction Act of 2005 ("DRA"). It is well-known throughout the elder law community that the legislation of DRA provides preferential treatment to annuities consisting of qualified retirement assets; but to what extent?

In the majority of states, an immediate annuity that has a tax-qualified status is not required ...
... to be irrevocable, non-assignable, provide equal monthly payments, or be actuarially sound. However, it does usually need to designate the state Medicaid agency as a beneficiary. Only a limited number of states do not require tax-qualified annuities to designate the state Medicaid agency as a beneficiary.

In the matter of Entz vs. Reed, Index No. 2009-10454 (Sup. Ct Monroe County, March 9, 2010), a woman residing in a New York nursing home, receiving Medicaid benefits, purchased an immediate annuity consisting of tax-qualified funds from her deceased husband's IRA. The tax-qualified annuity did not designate the state Medicaid agency as a beneficiary. Thus, the New York Medicaid office terminated the woman's Medicaid, reasoning that the annuity purchase was an uncompensated transfer. The petitioner raised the following issues:

Whether the Department incorrectly treated an annuity contract owned by an IRA as an available resource;
Whether an annuity contract owned by an IRA must name the Department as beneficiary to the extent of benefits paid in order to not be treated as an available resource; and
Whether the agency's determination is contrary to federal law.

In New York, if a Medicaid applicant or community spouse is receiving required minimum distributions from his or her IRA, the account will be considered an exempt resource for Medicaid eligibility purposes. The petitioner has an IRA, which then purchased an annuity as an investment asset. The petitioner was receiving amounts from that annuity that sufficiently met the minimum distribution requirements. It was decided that the IRA itself is exempt from being treated as a resource and is free to purchase any investment provided that the IRA makes the required monthly distributions, which is exactly what was occurring.

The resulting decision was that there was no further requirement that the IRA owned annuity must also name the state as beneficiary. The divestment penalty period was reversed, and benefits for the petitioner were reinstated without interruption. Furthermore, a similar decision was recently made in Wisconsin on a case that had very similar facts. Is this the new trend?

The contents of this article may greatly vary depending on the state of application. As such, please check your state rules or consult with a representative of Krause Financial Services for further clarification on how annuities are treated for Medicaid purposes in your state.

Total Views: 354Word Count: 572See All articles From Author

Add Comment

Investing / Finance Articles

1. Innovative Accounting Solutions For Modern Businesses
Author: Business Tax & Money House

2. Can Someone With Bad Credit Still Get A Short Term Loan Online?
Author: Jockey Ferguson is a financial adviser of Fast Pay

3. How To Manage Cash Flow For Online Retailers
Author: Thomas Edward

4. A Detailed Guide Set Up A Company In Ireland
Author: LSC and Partners - Corporate Tax Consultancy LSC

5. Rupay Credit Cards: Your Ticket To Exclusive Rewards And Benefits
Author: Priya

6. Top Upcoming Telegram Airdrops You Don’t Want To Miss!
Author: Cryptoreach

7. The Art Of Diversification - Building A Robust Portfolio For Long-term Stock Market Performance
Author: Broker Analysis

8. 10 Effective Strategies To Boost Real Estate Lead Generation In 2024
Author: Horizon Consultants

9. How To Choose The Best Financial Advisors In Indianapolis For Your Future
Author: Kurt Supe

10. What Are The Requirements For Applying For A Personal Loan?
Author: divya negi

11. Investment Banking Companies In Hyderabad: Your Guide To Financial Excellence
Author: Verity knowladge solutions

12. No Credit Check Payday Loans
Author: Daniel

13. A Complete Guide On All Cfo Services
Author: Vibhay Ranjan

14. Navigating Success: The Role Of Venture Capital Deal Flow Management Software
Author: Fundwave

15. Streamlining Investment Strategies: The Rise Of Fund Management Software
Author: Fundwave

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: