The Facts

Medicaid is a US health insurance program that provides long term medical care, including emergency rooms visits, prescription drugs, doctor visits, hospital stays and other treatments for those who qualify. Medicaid is jointly funded by the state and the federal government.

You must reside in the state of qualification and in general you must meet the financial requirements. Medicaid is primarily for people who are disabled of any age and cannot meet the needs of their medical care.

Medicaid is not free. 
The Medicaid system has been funded by taxes that you have paid over the course of your life. At the time of receiving Medicaid, the patient is disabled and Medicaid then covers the expenses of long-term care like an insurance policy.

Medicaid and Medicare are two different programs. Medicare is a short term state funded disability program.

Annuity Protection Fallacy
Deferred annuities are not and never have been able to be protected from Medicaid. With proper asset protection some annuities such as the type that provide irrevocable guaranteed income stream may be protected in some states.

Deficit Reduction Act
Under the provisions of the Deficit Reduction Act (DRA) of 2005, Congress provided a Medicaid Integrity Program to combat fraud, waste and abuse. The rules are very specific and it is against the law to not disclose or report all aspects of a person’s estate.

Did you know that there are annuities with LTC (Long Term Care) riders? 

Beginning January 1, 2010, Section 844 now provides for an annuity with Long Term Care insurance to be income tax free, provided that it is a “tax-qualified” benefit and not one owned in a qualified plan as well as the premium payments made inside the policy from the cash value.

Sheltering Assets in Trust 
It is not against the law to shelter assets in trust from Medicaid. What is illegal is to not disclose these types of asset protection and to not pay taxes. You will need qualified expert help to comply with the law and accomplish the goal of passing an estate, which you have already paid taxes on, to your heirs.

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