| Qualified vs. non-qualified…read on:
READER QUESTION:
Can Lawrence comment on how a pension or a fixed, or even a variable annuity might affect the ability to get qualified for Medicaid? Thank you.
MY RESPONSE:
Of course I can!
A pension that you receive monthly is considered income. Subject to certain exemptions, your income is counted and must be spent down on your care before Medicaid will pay. In the community Medicaid situation (home care), we can use the pooled trust technique to protect that income.
Pensions and annuities that are represented as a lump-sum investment may or may not be exempt from Medicaid. If the money in the account has never been taxed and you must take out required minimum distributions (RMDs) at a certain age (70 ½ or 73, or 75, depending upon your current age), then the account is not counted as an asset but forced withdrawals as determined by Medicaid, not the IRS, will be considered income (see above). This includes all IRAs, 401Ks, 403Bs, etc. Essentially, IRAs and qualified plans all funded with pre-tax dollars will be exempt as an asset but not as income.
However, non-qualified accounts, including annuities, funded by after-tax dollars, are fully counted as an asset for Medicaid and would have to be transferred to protect them, subject to the look-back rules.
I hope this helps! |
