Medicaid Compliant Annuity

Medicaid Compliant Annuity is a specific tool that we utilize for the Medicaid Crisis Plan. Atty. Chris Berry discusses Medicaid Compliant Annuity in this episode of Daily Wisdom.


Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.


For more info visit:


Episode Transcript

Medicaid Compliant Annuity

Hello, this is Chris Berry from Castle Wealth Group. Today, we’re going to talk about a Medicaid Compliant Annuity. If you like this information, please make sure to subscribe to our YouTube channel.

Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications, such as Forbes, Kiplinger’s, Crain’s Detroit and more. He’s the host of the weekly radio show and podcast, The Chris Berry show. He’s a national thought leader, as it relates to retirement and legacy planning, and as author of the Amazon best selling book, The Caregiver’s Legal Guide.

So today we’re going to speak or discuss a very specific particular type of tool that we use when we’re doing Medicaid crisis planning. And what we’re talking about today is what’s called a Medicaid Compliant Annuity. Now I hesitate to talk about specific tools because I always like to focus first on what are the goals and then develop the strategies. And only then do we talk about a specific tool. So if you do have a loved one, that’s in a nursing home right now, and they’re paying 8 to $12,000 a month in costs, and they have assets to protect and you want to protect one of those assets. Then one of the strategies might be to engage in what we call a Medicaid Crisis Plan. So these are available to individuals or families who have a loved one in a nursing home right now paying 8 to $12,000 a month, in a devastating nursing home cost.

And within that five-year look back because remember, Medicaid has a five-year lookback period. There’s things we can do within that. five-year Medicaid lookback period time to sell or protect assets. So if you have a loved one that never did any type of planning, they had a stroke, found themselves in a nursing home, understand you could just spend down their assets until they get to that $2,000 asset limit for Medicaid. And you can’t give things away because now Medicaid has a five-year lookback period. So this is where as a certified elder law attorney, we could help you with a Medicaid crisis plan, where we might be able to protect at least half of those assets. And the way that we would do this as utilizing what’s called a Medicaid Compliant Annuity. Now it’s very different than any of those other types of annuity. So you have to be very careful, not all annuities are Medicaid compliant annuities.


Crisis Planning

I’m not talking about Medicaid friendly annuities. I’m not talking about an annuity as an investment. Really all we’re doing is we’re taking a pot of assets and turning that into an income stream for an individual. And in the past, we used to be able to do what’s called, Sole Benefit Trusts, where we could move these assets into a trust solely for the benefit of an individual, or we could do a promissory notes and we have different strategies available. But with Medicaid Crisis Planning, what happens is the state of Michigan sees what we’re and then they change the rules on us. Very different than planning ahead. When we plan ahead utilizing asset protection trust the state doesn’t mess with us too much. They don’t penalize people that plan ahead, but they’re always looking at people who wait till the last minute haven’t done any type of pre-planning all of a sudden they do Medicaid Crisis Planning, and they are looking at the strategies we’re utilizing to try to protect those assets.

And so one of those Medicaid Crisis Planning strategies right now is what’s called a Medicaid Compliant Annuity. And this fits into what’s called a half-loaf plan. Think of it like a loaf of bread. Half the money has to go to the nursing home. The other half we could protect. Well, the half that has to go to a nursing home, we don’t just give it outright to the nursing home all at once, for a variety of reasons. That’s just not going to work. And in the past we might’ve been able to use what’s called a promissory note, but now we have to be more of a hands-off with it, more of a third party transaction, where the Medicaid Compliant Annuity, it’s not an investment.


Gift of Trust

We’re not trying to look at making money on this. What we’re doing is we’re trying to get the assets out of the Medicaid individual, the person trying to apply for Medicaid, get it out of his name or her name so that they only have $2,000 worth of countable assets. Part of that money, we can gift maybe to a trust. The other half would have to put into a Medicaid Compliant Annuity. Now the gift of the trust creates a penalty period. And so we structure the Medicaid Compliant Annuity in such a way that it runs for whatever that Medicaid penalty period is, might be six months, eight months where let’s say, where we put a $100 000 into this Medicaid Compliant Annuity. We could gift away maybe a $100 000 to the trust. Now the individual is below $2,000 and then that $100 000 that went into the Medicaid Compliant Annuity comes back to the individual to help pay for that penalty period.

Now this seems confusing and it is, but understand a Medicaid Compliant Annuity is a specific tool we utilize in Medicaid Crisis Planning, and it’s complicated, it’s convoluted, it’s illogical, it’s draconian. The rules don’t make sense, but that’s why as a certified elder law attorney, that’s been doing this for over 15 years, sometimes we have to use Medicaid Compliant Annuities to protect those assets.

And again, don’t think of these as investments. We’re trying to get a rate of return. Really all we’re doing is turning an asset into an income stream for the penalty period that we’re creating by gifting or protecting at least a portion of those assets. Hopefully you found this helpful. If you want more information, make sure to subscribe to our YouTube channel or reach out to us at 844 885-4200. Or you can visit us on the web at This has been Chris Berry with Castle Wealth Group. Thank you so much.

Castle wealth group has clients across the nation and helps them plan, protect and preserve what is important by creating a retirement and legacy blueprint.



Castle Wealth Group Legal in Media

Send Us a Message