People who have considered the ever-increasing costs of long-term care in a skilled nursing facility or in-home have shared their concerns about ways to afford the costs. The question is relevant as the national average costs of assisted living and other senior care facilities are very high and many people are looking for ways to cover the senior healthcare costs.
For many people looking to afford long-term care for their senior loved ones, Medicaid can be a great help. However, if your senior loved one has assets that exceed the Medicaid requirements, they will not qualify for Medicaid. This is where annuities can come to help.
What Is Annuity?
An annuity is a financial product that is bought via periodic or lump sum payments and can provide fixed yearly or monthly sum payments for the rest of the life of the recipient.
How Can Annuities Help Cover Long-Term Senior Care?
While considering long-term senior care costs, you will be often looking at recurring monthly costs. It might be the cost of in-home care, assisted living costs, and eventually nursing home care costs. This can be a fixed monthly charge and annuities can help cover these costs.
Annuities let you transform a lump sum into recurring monthly income which is guaranteed for the lifetime of the recipient. This means that an annuity is a guaranteed income for the lifetime of the recipient which can help cover the charges of long-term care. That said, the annuity can also be considered an asset, thereby disqualifying your senior loved one from Medicaid. However, there are other annuities available that are not considered assets and can help your senior loved one qualify for Medicaid benefits.
Categories Of Annuities
There are two broad categorizations for annuities – deferred annuities and immediate annuities. You can set up a deferred annuity with a lump sum or with fixed payments over a specified period. In the case of a deferred annuity, you will need to wait for your nest egg to grow until you receive income after the specified time. You will usually start to receive your income in retirement.
In the case of an immediate annuity, you make a lump sum payment and immediately start to receive a specific income monthly. Usually, these annuities are contracted via an insurance company and are available regardless of any pre-existing conditions or health status of the individual. If the assets of your senior loved one exceed the limits set by Medicaid, immediate annuities can help turn those assets into an income, thereby helping your senior loved one qualify for Medicaid benefits.