BIP Winter 2025

The hidden lifeline in LTC Understanding Medicaid Compliant Annuities can help advisors protect clients’ assets. By La Rae Mills

Long-term care remains one of the most pressing financial risks facing American families. Ac cording to recent estimates, the average annual cost of a private room in a nursing home now exceeds six figures. While purchasing LTC insur ance well before they require care is ideal, the unfortunate reality is that many people fail to plan ahead. The good news is that you can still help them con front these financial challenges when facing a long-term care crisis, even if they did not plan ahead. That’s where Medicaid crisis planning comes in. Medicaid is the country’s largest payer of LTC. While families may assume it only serves low-income households, middle-class individuals and couples frequently end up rely ing on Medicaid after exhaust ing their resources. Without guidance, they may deplete their assets unnecessarily. The Medicaid Compliant Annuity (MCA) provides an alternative. By converting excess countable assets into an income stream, it allows the individual who requires care to qualify for Medicaid more quickly while preserving financial stability for the spouse at home or protecting funds for their children or other loved ones. For advisors, the MCA is an essential tool that comple

So, how can insurance professionals integrate Medic aid planning into their toolkit? 1. Learn eligibility basics. Rules vary by state, so start by exploring the asset and income limits, spousal impov erishment protections and resource tests for your state of practice. A working knowledge of eligibility is essential. 2. Know when to use MCAs. MCAs are designed for crisis scenarios, when a client is already in need of care and traditional planning tools, such as LTC insurance, are no longer viable. Advisors should recognize these situations and collaborate with specialists to implement the MCA effectively. 3. Build a network. Medicaid planning often requires coordination with at torneys and financial experts. Building a trusted network ensures Medicaid compliance

La Rae Mills, LTCP, is insurance operations manager at Krause Agency.

TIP: Incorporating

Medicaid planning

ments LTC insurance and other senior market products — not a replacement. Consider the case of a mar ried couple facing a sudden nursing home admission. The couple has $250,000 in sav ings — too much to qualify the spouse who needs care for Med icaid. Without planning, they risk draining nearly half their assets before Medicaid eligibility can be established. By working with an advi sor knowledgeable in Medicaid planning, the couple instead uses an MCA to convert their excess assets into an income stream. The spouse in care qualifies for Medicaid almost immediately, and the spouse at home preserves financial secu rity to maintain their lifestyle in the community.

strategies, particularly MCAs, expands the

advisor’s role from insurance agent to

trusted guide through life’s most difficult transitions.

and client confidence. 4. Educate clients. Even before a crisis hits, advisors can help clients

understand that Medicaid is a realistic part of the LTC con tinuum. Setting expectations can reduce fear and stigma when a crisis hits.

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