Annuities that are Considered for MassHealth Eligibility

Deferred, or variable, annuities are generally considered countable assets that factor into MassHealth eligibility (see MassHealth , but immediate annuities are not. Immediate annuities are contracts with insurance companies wherein the annuitant pays a certain sum to the company in exchange for a promise that the company will pay back a fixed monthly amount. Buying an immediate annuity or converting a deferred annuity to an immediate annuity is not treated as a transfer of assets for eligibility purposes if certain requirements are met.

For example, say Harry and Wendy are a married couple in Newton, MA, with $250,000 of countable assets when Harry moves to a nursing home. Wendy could convert $150,000 to an immediate annuity guaranteeing her a lifetime income stream, at which point Harry would immediately qualify for MassHealth coverage.

A single person in a nursing home with $100,000 in countable assets could also convert it into an income stream with a guaranteed payment of, e.g., five years. The monthly payments would have to be paid towards his cost of care, but if he died before the expiration of the five-year term, the balance of payments would go to his children (or whoever else he named to receive them).

An immediate annuity can be used to shelter assets for spouses of nursing-home residents and, in some cases, for single individuals. Note, however, that the guaranteed annuity payments would first go to the state to reimburse it for costs of care paid on behalf of the annuitant. If there are any payments remaining after the state is reimbursed, they can be distributed to family members. Annuities therefore carry an unavoidable risk that the annuitant will pass away before receiving many payments, with the remaining payments going to the state.