Using a Single Premium Immediate Annuity in Medicaid Planning (SPIA)

HNWApplying for Medicaid Long Term Care Benefits

NJ MedicaidIn order to be eligible for Medicaid long-term care, there are eligibility requirements that must be met. This includes financial (income and assets) eligibility.

To be eligible for nursing home or assisted living care, an applicant must have a very limited amount of financial resources or “countable assets” in Medicaid-language. Medicaid has non-negotiable and fixed asset limits. You can’t be over these limits by even one dollar.  A Medicaid compliant annuity is a planning strategy that allows one to lower his/her countable assets, and therefore, meet Medicaid’s countable asset limit requirements.

Most states, including New Jersey, set an asset limit of $2,000 for a single elderly applicant. For married couples, with just one spouse applying to Medicaid to get nursing home care, the couples’ assets are considered jointly owned. What this means is that all assets owned between the couple are added up and considered when determining the applicant spouse’s eligibility for Medicaid.

It’s important to note that there are spousal impoverishment rules in place when just one spouse of a married couple is applying for nursing home Medicaid or home and community based services. One such spousal impoverishment rule is called the Community Spouse Resource Allowance (CSRA), which allows the non-applicant spouse to retain a higher amount of the couples’ joint assets.

How a SPIA is Relevant to Medicaid Eligibility

If an applicant/community spouse is over the Medicaid asset limit, he/she must spend down excess assets in order to meet the countable asset limit of $2,000.

Annuities called a SPIA give applicants an option to convert countable (non-exempt) assets into non-countable (exempt) income. By turning assets into an income stream, Medicaid no longer counts the assets towards the asset limit. However, for Medicaid applicants, income from an annuity is counted towards Medicaid’s income limit.

Is a SPIA appropriate for the Medicaid planning you may need?   There are requirements that a (SPIA) annuity has to meet for use in the Medicaid planning process if the intent is to prevent the income from the annuity from being a countable asset and excluded from mandatory spend down.  It is a complicated analysis.

To be eligible for use in Medicaid planning in New Jersey, a SPIA in Medicaid planning must be:

  • Irrevocable
  • Non-assignable
  • Actuarially sound

A SPIA must also designate the state Medicaid agency as a beneficiary and customarily must provide for equal payments with no deferred payments or balloon payments.

How Does a SPIA Work in Medicaid Planning?

Moving a lump sum of countable assets into a SPIA eliminates those assets from being considered countable assets owned by the nursing home resident or Medicaid applicant.  Not having countable assets may help make an individual eligible for Medicaid long term care benefits.

To discuss your NJ Medicaid matter, especially the successful usage of SPIA, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Medicaid Attorney

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