New Medicaid Annuity Rule Enacted

A small but important change relating to Medicaid annuities was signed into law Dec. 20, 2006, as part of the Tax Care and Health Care Act of 2006. It changed the word "annuitant" to "institutionalized individual" in the section of the federal statute that described annuities intended to be helpful for Medicaid planning.

So what does all this really mean? Essentially, if a spouse who is living in the community (the so-called "Community Spouse") purchases an annuity that meets all the requirements necessary to avoid having that purchase treated as a gift, that spouse must now name the state as beneficiary up to the amount of any Medicaid payments made on behalf of the "institutionalized individual" (instead of the "annuitant").

So who, exactly, is the "institutionalized individual"? Well, clearly if the Community Spouse purchases an annuity, the other spouse, who is in a nursing home, is the "institutionalized individual." As such, upon the death of the Community Spouse, if the annuity has not yet made its final payment, the state will be entitled to receive future annuity payments, up to the amount of the value of all Medicaid benefits it made and will make on behalf of the nursing home spouse.

Prior to this change in the law, repayment in the above situation would have been due only for nursing home expenses of the Community Spouse.

Example: Mary and Dan have $150,000 in assets. Mary lives in the community and purchases a $50,000 Medicaid annuity payable to her. Dan, who is in the nursing home, immediately qualifies for Medicaid, because (i) the annuity itself does not count as an asset for Medicaid eligibility purposes, assuming it is correctly structured, and (ii) Mary's remaining assets are less than $101,640, the excluded amount for community spouses (although some states only allow Mary to exclude half that amount, most states allow exclusion of the full amount).

Two years later, Dan dies. Results:

1. If the annuity pays out completely before Mary dies, then the new law makes no difference, since there is no remainder to go to the state. (This would typically be the case in so-called "half-a-loaf" planning, a topic for another day!)

2. If Mary dies before the annuity is fully paid out, then it will make a difference, because now Dan's costs must be repaid from the remaining annuity payments. Under the prior law only Mary's costs---if any---would need to have been repaid (and if Mary never went to a nursing home, then Dan's costs would never be recouped by the state).

3. If Mary enters the nursing home during the annuity payment period, those payments will go to the nursing home, since they are considered her income. If Mary then dies before the annuity is fully paid out, not only must Dan's Medicaid benefits be repaid to the state, but depending on how the new law is eventually interpreted, it's quite possible that Mary's Medicaid benefits must also be repaid out of future annuity payments.

Note that although this change was just signed into law, the law itself states that it is effective as if it were part of the original law that it is amending. Thus, it applies to all annuities issued after February 8, 2006, the date of enactment of the Deficit Reduction Act of 2005.

K. Gabriel Heiser

Attorney K. Gabriel Heiser has devoted his legal practice to Medicaid planning, elder law, and estate planning for the last 23 years.
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Understanding Annuities Can Lead to More Annuity Sales

I am always amazed about the questions I get from agents regarding the types of annuities available. Annuities come in many shapes and sizes each designed for a specific use. One annuity may have benefits another does not and it is important to know the features and benefits of each contract.

Single premium deferred annuity: As the name implies it is a one time deposit and no further deposits are accepted. A single premium annuity can be many different types such as a fixed annuity, an indexed annuity and a variable annuity. Each of these types of single premium deferred annuities has their own features and benefits. I will discuss each of these later.

Flexible Premium Deferred Annuity: This type of annuity allows for continual or sporadic additional deposits. Each deposit is added to the account value and can be deferred. Variable, indexed and fixed can all be flexible premium annuities.

Single Premium Immediate Annuity: These contracts are used to create an income stream. A single deposit is made and an income will begin at a pre-agreed upon time. These payments to the annuitant can be monthly, annually or most other time periods. Any time period for the payout can be selected from any number of years to a lifetime guaranteed payment.

Variable Annuity: Variable annuities are securities and are sold with a prospectus. Variable annuities allow for the annuitant to designate a specific type of sub account or investment for the funds to be invested in. These sub accounts are like mutual funds in the sense the money is managed by an outside source and there is no limit to the growth of the funds or the exposure to loss. The money in the variable annuity is not at the insurance company but is on deposit at the fund manager. Variable annuities do have a guaranteed rate of return section which usually is a lower rate of interest. Variable annuity owners may switch investments in the annuity in the event of a new investment goal is desired. These changes can be completed without any tax liability. The funds in a variable annuity are not guaranteed and exposure to loss is part of the investment risk. In the event of death, variable annuities will guarantee at least the return of the original investment in the event the account is lower.

Indexed Annuity: Indexed annuities are fixed annuities whose returns are set to an outside source such as the Dow Jones Average. The funds in an indexed annuity are on deposit with the insurance company and not actually invested in the indexes. There are numerous options for selecting the type of crediting rate and how it interfaces with the specific index. One strong positive about indexed annuities is the deposit is fully guaranteed to never lose money and once a new amount is credited to the annuity then that becomes the guaranteed minimum.

Fixed Annuity: Fixed annuities come in all sorts and sizes from a few years contract to a longer period. Some will fully guarantee the interest rates the entire time period while others will allow the insurance company to determine the interest credited year to year. The funds in a fixed annuity always have a minimum interest which is fully guaranteed. Fixed annuities also guarantee the full account value.

Annuities are not for everyone but for those that will benefit from these contracts they can be perfect. Safety and security is the basic attraction to an annuity and when these benefits are needed they can be of enormous value. Developed your expertise, understand which annuity products are right for the unique circumstances and needs of the investor and increase your annuity sales.

Bill Broich is a 30 year annuity salesman who helps agents increase their annuity sales. Visit his website to learn more. Annuity.com

Structured Settlement Annuity Sale for Lump Sum - Should You Get Your Cash Now?

What If You Do Not Want to Wait for Your Structured Settlement Money?

When structured settlements are awarded from lawsuits such as product liability, personal injury, or accidents, in general an insurance company buys an annuity. This annuity pays a mixture of principal sum and an interest over an agreed period of time at a schedule that is agreed with the structured settlement payee. Having said that, the structured settlement recipients may be in a financial situation where the money is needed immediately and cannot wait for the cash to be paid in small sums. Fortunately, the structured settlements can be exchanged for a large lump sum payout for all or some of the recipients? future annuity payments. You can basically sell small part or your entire future entitlements to be paid over the years for a lump sum of cash now.

Should You Sell Your Structured Settlement or Annuity Now for Cash?

A Structured Settlement is designed for paying out for the financial obligations over a period of time, but what if you need your money today? Selling your structured settlement or your annuity for cash can be a lifesaver in some situations and fortunately, there are a few reputable companies that can pay you a large lump sum in exchange for your future payments from structured settlement. However, how do you know if selling your annuity or structured payments is the best option for you? After all, every person's situation is different. If you are in debt or require cash immediately, it may be prudent to sell all or part of your entitlements. This can potentially save you hundreds, or thousands of dollars that you would otherwise have to pay in interest.

Whether you have already decided to sell your structured settlement or annuity for cash, do shop around for best deal! Getting a good deal when it comes to structured settlements or annuities does pay off. You may end-up with much more money in your pocket as few fractions of percentage can make a big difference over the years.

Go ahead and use the Internet for research on your structured settlement or annuity.
Rush over to the Structured Settlements vs. Lump Sum of Cash article at SaveHog.com lump-sum-structured-settlement.savehog.com section, where you will find a variety of valuable information about structured settlement and lump sum, as well as host of online resources, calculators and structured settlement companies that can provide you with a free quote on structured settlement lump sum.

Compare A Fixed Annuity Rate The Easy Way

The best way to compare a fixed annuity rate is to get on the Internet and visit one of the many brokerage style sites that have collected information about the various deals that are available from different life insurance companies. Simply type ?compare fixed annuity rate? in a popular search engine such as MSN or Google and hundreds of online comparison charts and product comparison sheets will turn up in the search engine result pages.

Some insurance company sites also just have a page titled compare fixed annuity rate. Within these pages is where you can find exactly the type of insurance that you are looking for.

Another great thing about these insurance companies is that they are usually very insurance friendly when it comes to online customer support. If they don't actually provide an online chat forum then many of them offer to answer your questions directly by email. Also unlike most web sites that are run by big faceless banking corporations you can find the telephone number of a live person to speak to as an insurance company can hardly wait to have you deal with one of their customer representatives in person.

Surprising the insurance companies are very user friendly as well as quite friendly to their competition. One trend lately among insurance companies who offer a page titled something like ?compare fixed annuity rate? is to include the names and amounts offered by their competitors even if they are a better deal then what is offered! Supposedly this willingness to pass the hat to their competitors is based on the idea if that you think that they are honest enough to do that then the insurance company will be completely honest in all of their dealings with you. However it is not necessarily the best idea to fall for this when comparing fixed insurance rates - always go for the deal that is best for you.

Tiffany Walker has finally revealed her annuity secrets online. Read the latest by clicking here: Compare Fixed Annuity Rate.

Fixed Annuity Company - The Concept

The elders of the Presbyterian Church first brought the concept of a fixed annuity company to light in the mid seventeenth century. The idea was to provide a yearly pension for widows and the elderly members of the clergy. The concept of the fixed annuity company hasn't changed much in the present day. Perhaps the only difference is the tax deferment that is characteristic of most modern annuities.

The idea behind an annuity is that they allow you to invest in a tax-free fund for a number of years until you are ready to withdraw money. Once you withdraw from the fund you would be taxed on it as you would regular income. In the financial world the process of providing you with a check that you cash every year from your saved taxed deferred funds is called annuitization.

Every fixed annuity company today will also offer you the guaranteed income for life option. You can also opt to be paid the annuity for a certain specified period of years which of course if very handy if you ever suffer an illness or disability.

There is not really such a thing as a fixed annuity company. If you went through the Yellow Pages you probably would not find such an entity. Most of the time it is an insurance company offering you the fixed annuity. Annuities are also sold through licensed insurance brokers and agents. Using a broker to find an annuity deal is a good idea as it allows you to compare various interest rates offered by different insurance companies.

The reason that it is a good idea to invest in products offered by a fixed annuity company is that if it ever goes out of business that the other insurance companies in the state where the defunct insurance company is are obligated by law to honor the conditions of your annuity.

Tiffany Walker has finally revealed her annuity secrets online. Read the latest by clicking here: Fixed Annuity Company.

Making A Rational Decision About A Structured Settlement Annuity

It is very easy to become aghast by the sheer volume of e-mails, web sites, tv and journal advertising and legal talk when considering the issue of structured settlements or annuities. We will investigate what, exactly, a structured settlement is so that you are better able to understand the concept and be able to make a rational decision.

To begin, let's explore just what a structured settlement is. It is simply a series of guaranteed disbursals - also known as annuities - made over a certain period of time and is usually the result of an injury settlement or another situation in which you are awarded access to a substantial whole amount of money. It is the alternative to accepting an upfront lump sum.

Structured settlements are individualized arrangements meant to help you cover present and forthcoming expenses. By working closely with an experienced attorney or financial advisor you can determine an effective structured settlement to give you the security of a fixed income over a set period of time. This can help you sleep better at night by taking a huge burden off your back.

There are various types of these annuities. You can learn more about them over at http://www.fixmyannuity.com, but here is a brief explanation of each. This is by no means a complete list, but should give you a fair idea of what is out there:

A certain Period Annuity has a certain period of time for the payments to be paid out. They can be made monthly, quarterly, semi-annually or annually. Upon your death, all remaining payments are made to you beneficiary.

A Life Annuity will make periodic contributions for a guaranteed number of years (based on your life expectancy) or for life, whichever is up first. Again, the beneficiary receives any remaining disbursals should you die before the full whole amount is paid.

A Temporary Life Annuity will pay you for a designated number of years if you are still living, so your annuity ends when you die. There?s no provision for a beneficiary to collect remaining disbursals.

In a Life Contingent Lump Sum you?ll receive a lump sum, provided you are alive on the due date. If you die before this date, your beneficiary is not entitled to the whole amount.

Finally, with Lump Sum Option you can set it up to receive the lump sum on a particular date, say, fifteen years from now. Your beneficiary will receive the lump sum on the future date if you have died before then.

So which type is right for you? The best advice we can offer is to do your fact-finding work. Discuss your situation with your financial advisor and family. That way when you make the decision you'll know what your getting and have considered all the options.

Yvonne Volante, the author, is a big fan of annuities and proper planning and writes for fixmyannuity.com, which is the premier annuity resource on the internet. You can see all of the articles over at http://www.fixmyannuity.com