Gift Annuity: Protection Against the Fear of Losing Your House to the Nursing Home

If you are on Medicaid and are in or planning to enter a nursing home, how can you protect your home and assets?

The high and ever-increasing cost of long-term care can be daunting and will quickly deplete your savings without the assistance of Medicaid. However, Medicaid will still seek to recover its cost from your estate. This could cause you to lose your house and other property to the point where there is nothing left for your children. The Medicaid Estate Recovery Plan (MERP) is a federally mandated program that began in Ohio January 1, 1995. When a Medicaid recipient dies the MERP attempts to recover the cost of services that Medicaid paid for from the deceased’s estate. The estate includes all personal and real property, including assets conveyed to others via survivorship. However, there are ways you can plan ahead to ensure MERP cannot take the house, or that your beneficiaries can still receive value from its sale.

One such protection is a Gifted Annuity. If you do not qualify for any of the exceptions that would allow you to keep your home, then you must sell to ensure your children or beneficiaries can still receive some of the value rather than the entire estate being recovered by Medicaid. The annuity will allow the insurance company to fund a Gift Annuity and for some of the value of your estate to be maintained.  This route can guarantee that a portion of your house equity will still be given to your children or beneficiaries. Otherwise, based on the current cost of long-term care, it is likely the nursing home expenses paid by Medicaid will create a lien on the value of your home and leave your family with little to nothing.

There are many considerations and options to weigh when trying to protect your assets from all going to cover the cost of nursing home care. The rules governing the MERP, its exceptions, and methods you can use to protect yourself and your family are very complex. It is highly recommended that you work closely with your attorney, CPA, and financial advisors to navigate various options.

Bill Hesch is a CPA, PFS (Personal Financial Specialist), and attorney licensed in Ohio and Kentucky who helps clients with their financial and estate planning. He also practices elder law, corporate law, Medicaid planning, tax law, and probate in the Greater Cincinnati and Northern Kentucky areas. His practice area includes Hamilton County, Butler County, Warren County, and Clermont County in Ohio, and Campbell County, Kenton County, and Boone County in Kentucky.

(Legal Disclaimer: Bill Hesch submits this blog to provide general information about the firm and its services. Information in this blog is not intended as legal advice, and any person receiving information on this page should not act on it without consulting professional legal counsel. While at times Bill Hesch may render an opinion, Bill Hesch does not offer legal advice through this blog. Bill Hesch does not enter into an attorney-client relationship with any online reader via online contact.)