asset-protectA federal appeals court ruled yesterday that “annuities with certain characteristics, including nonassignability clauses, are not assets to be counted as resources” for purposes of Medicaid eligibility.

The ruling affirms the role of planning in achieving the most favorable result for the Medicaid applicant. “Financial planning is inherent in the Medicaid scheme,” the court wrote. The court also noted that using “an elder law attorney to develop a Medicaid eligibility plan … helps ensure that the annuities purchased are Medicaid-compliant, and thus helps reduce the risk of litigation.”

The ruling settled a question about whether some short-term annuities purchased by Medicaid applicants comply with federal law. The court ruled that as long as the annuities comply with Medicaid’s “safe harbor” provisions, they will not preclude eligibility for benefits.

Annuities may violate Medicaid law’s requirement of being “actuarially sound” if they exceed the annuitant’s reasonable life expectancy, but not if they are shorter than life expectancy, according to the court.

The ruling came from the U.S. Court of Appeals for the Third Circuit, which includes Pennsylvania in its jurisdiction.

You can read the full opinion here.

Do You Need Medicaid Planning?


412-531-7123 (Western PA)
215-600-0250 (Eastern PA)

Schedule a consultation call


Loved one in a nursing home (or soon to be)?

Find out if they qualify for Medicaid with our FREE downloadable guide & worksheets - or call to request a free copy be mailed to you.

Get answers about how PA values assets, and calculate step-by-step whether your loved one is eligible (and if not, get advice on what to do next).

Download Now

Related Posts

The #1 Problem in Powers of Attorney

The #1 Problem in Powers of Attorney

In the many powers of attorney I see in my line of work, one problem recurs over and over again. And it’s costing families tens of thousands, and even hundreds of thousands, of dollars in asset protection. The number one problem is inadequate gifting provisions. If...

Who has capacity to make a will?

Who has capacity to make a will?

Fundamental to the validity of any last will and testament is that the testator (person whose will it is, and who is signing the documents) had capacity at the time of execution. By statute, a testator in Pennsylvania must be “of sound mind” to make a will. (20 Pa....

Share This