Integrating Medicaid Compliant Annuities (MCAs) into your planning process can be a powerful way to help clients secure long-term care funding. However, not every client is a good fit for an MCA. To determine if this strategy is the right solution, consider these three key factors.

Madolyn Reynolds, CLTC Agency Business Development Director Krause Agency

1. The client is in a long-term care facility and plans to stay.

MCAs are designed for crisis planning—helping clients who are already in a Medicaid-approved long-term care facility and require ongoing care. To qualify, the client must be ready to apply for Medicaid immediately.

Additionally, because MCAs are irrevocable and non-assignable, they are best suited for clients who will remain in long-term care indefinitely. If the stay is only temporary, an MCA may not be the best option.

2. The client has exhausted their Medicare or LTCI benefits and is paying out of pocket.

Once Medicare or long-term care insurance (LTCI) benefits run out, clients are often left covering facility costs out of pocket—draining their savings quickly. An MCA can help by converting excess countable assets into a Medicaid-compliant income stream, allowing the client to qualify for Medicaid without spending down their entire estate. This strategy helps:

• Secure Medicaid assistance sooner
• Relieve financial strain on the client and their family
• Preserve remaining assets for a spouse or heirs

3. The client has assets to protect.

For an MCA to be effective, the client must have countable assets that need protection. While there’s no strict asset threshold, the funds should be:

• Liquid and readily accessible (e.g., savings, CDs, brokerage accounts)
• At least $5,000 to make the MCA viable

If the client’s wealth is tied up in non-liquid assets like property, they will need to convert those assets into cash before using an MCA.

Alternatives for Clients Who Don’t Fit the MCA Profile

MCAs are a great tool, but they aren’t the right fit for everyone. Depending on the client’s situation, alternative strategies may be more suitable:

• For clients still in good health, long-term care insurance may be a better solution.
• For those with minimal assets to spend down, a funeral expense trust might be a more practical option.

If you’re unsure whether an MCA is the right approach, we’re here to help. Reach out to our team at Krause Agency for a case evaluation, and we’ll guide you to the best strategy for your client’s unique needs.