What role if any does the 36 month look period have on an immediate annuity and the beneficiary?
If the immediate annuity is purchased or if a deferred annuity is annuitized within 36 months prior to the Medicaid application, here’s what happens: Medicaid compares the amount of the annuity with life expectancy, and any projected payout that exceeds life expectancy is treated as a transfer of assets and will result in a penalty period. (pages 139-140 in my 2001 book, Long-Term Care: Your Financial Planning Guide). So as long as the annuity is actuarially sound, you’re ok. The income from it ($1200 in your example) does count toward the income qualification for Medicaid. If the person dies within the 10-year certain, most states allow the money to pass on to a beneficiary. A few states require the state to be the beneficiary, so it’s worth a call to an elder law attorney in the state to check that out. NJ, TX and WA to my knowledge have something like this. An attorney, Dale Krause, does national Medicaid Planning (only in crisis situations –otherwise he recommends LTC insurance) an
