FPA Dallas/Fort Worth
Summer 2017 Newsletter
The FPA DFW Newsletter has a NEW look!
FPA Night with the Texas Rangers
August 17th @ Globe Life Park, Arlington TX
DFW NexGen Retreat
August 19th @ RoughRiders Stadium, Frisco TX
FPA DFW Chapter Meeting
September 12th @ Crowne Plaza Hotel, Addison TX
Welcome New Members!
View National FPA's Your Membership Advantage Discounts!
Jordan Andreola - 1st Global
Toby Brown - LearnVest, Inc.
Linda Ginder - SFMG Wealth Advisors
Robert Griffin, CFP®
Greg Hutto, CFP® - Heritage Retirement Advisors
Paul Lightfoot, CFP® - Optima Asset Management, Inc.
Bruce MacFadyen - Door, Inc.
Brad Purifoy - Corporate Finance Associates
John C. Rhem
Grant Schroeder, CFP®
Brian Weatherly - Cox Financial Group
Kyla Wetzel, CFP® - SFMG Wealth Advisors
Curtis Williams, CFP® - CLA Wealth Advisors
Richard Winters, CFP®
Congratulations on Your Member Anniversary!
David Bell, CFP®
John Dodd, CFP® - Dodd & Associates
Emerson Bell, CFP® - Fee Only Financial Planning, Inc.
Janet Gaunt, CFP®, ChFC - Ameriprise Financial Services
Scott Cohen, CFP®, CFS, CAP - CD Wealth Management, LLC
Charles Green - Charles R. Green & Associates, Inc.
Ernest Isbell, CFP®
William Marley - Life Path Wealth Advisors
Joseph Nolan, CFP® - RGT Wealth Advisors
Tara Scottino, CFP® - True North Advisors, LLC
Steve Blankenship, CFP® - Heritage Financial Planning
David Dugger, CFP®, CPA - Westbrooks Dugger & Westbrooks
Laura High, CFP® - RBC Wealth Management
Mark LaDrew, CFP®, MBA - Waddell & Reed
Dallas McKee, CFP® - Lifeway Financial Corporation (FPA DFW Secretary)
David Nelson, CFP® - Daniels & Erickson Financial Advisors, LLC
Stephanie Poorman, CFP® - SFMG Wealth Advisors
Paul Streiber, MBA, CFP®, CRPC® - Heritage Financial Planning
Michael Woods, CFP® - Stocker Woods Financial, Inc.
Jessica Boghetich, CFP® - RGT Wealth Advisors
Carl Larimore, CFP® - Mercer Advisors
Caleb Martin, CFP® - GuideStone Financial Resources
Scott Parker, AAMS® - Charles Schwab & Co., Inc.
Using annuities in Medicaid planning
Steve Hamilton, JD, CLU, ChFC
Director, Advanced Consulting Group
What is Medicaid?
Medicaid, sometimes referred to as Title 19, is a federal and state program that provides medical assistance for those who qualify. The specific requirements vary by state and even by local communities. It is meant to assist those who don’t have the financial resources to pay for their medical care. It is often used for those who need but cannot afford the cost of long-term care but it may also provide assistance to those with special needs. It is a program that is meant to help the impoverished and needy.
There are generally 3 factors that have to be considered to determine if someone qualifies for Medicaid assistance.
Exempt of non-countable assets
Nonexempt or countable assets
Gift – A 5-year look-back for any transfers done for less than fair market value
There are also additional planning factors when a community spouse (the noninstitutionalized spouse) is involved since states have enacted non impoverishment laws to allow the community spouse to live at home and not be forced into poverty.
How are immediate annuities used in Medicaid planning?
Immediate annuities are used to convert assets into income to help bring the amount of countable assets down to within the Medicaid asset limitations. The Deficit Reduction Act (DRA) of 2005 established guidelines defining the characteristics an annuity must have to be considered a non-countable asset and excludable from the 5-year look-back. The annuity must:
Be irrevocable and non-assignable
Use life expectancy tables equivalent to the Social Security life expectancy tables used by Medicaid (This table is different from the life tables used for determining required minimum distributions for IRAs.)
Return all premium to the client by the end of the client’s life expectancy
Have a term no longer than the client’s life expectancy
Have no cash value
Be actuarially sound:
Cannot provide balloon payments
Must have equal payments
Have the beneficiary arrangement set up to comply with the state’s Medicaid recovery rules
States may have their own variations on these requirements, especially related to IRAs or money in retirement plans.
Guidance has to come from the client’s attorney
A qualified knowledgeable attorney who specializes in Medicaid planning in the client’s community needs to be involved if a client or client’s family is considering Medicaid. Only that attorney can provide specific legal advice and direction on setting up a Medicaid plan for a client. An advisor should get specific written directions on how the annuity application has to be completed. A copy of these directions or instructions should be kept in a file.
Does an annuity always have to be Medicaid compliant?
There may be planning situations where an annuity doesn’t have to meet the Medicaid requirements but the attorney will have to determine if that is appropriate based on the client’s situation. That is why it is imperative that written direction from the attorney be provided for how the annuity has to be set-up.
Medicaid regulations and requirements have changed and may change in the future, so it is best to have a plan that is not dependent on Medicaid. Good planning, with proper investing and the appropriate insurance products allows the client to determine the type of medical care and lifestyle that he or she wants.