--- title: Using a Medicaid Compliant Annuity to Spend Down Countable IRAs description: Learn how to use Medicaid Compliant Annuities to manage IRAs for Medicaid eligibility without triggering significant tax consequences. image: https://lhc.naifa.org/hubfs/AI-Generated%20Media/Images/The%20image%20depicts%20a%20modern%20conference%20room%20filled%20with%20professionals%20engaged%20in%20discussion%20Attendees%20a%20diverse%20group%20of%20men%20and%20women%20in%20business%20attire%20are%20seated%20around%20a%20sleek%20oval%20table%20some%20taking%20notes%20on%20laptops%20while%20others%20converse%20animatedl-1.png --- [**](https://lhc.naifa.org/lecpblog/using-a-medicaid-compliant-annuity-to-spend-down-countable-iras#tmpmodule_1610372601348145) - [Join](https://belong.naifa.org/join) - [Renew](https://community.naifa.org/login.aspx) - [Find an Advisor Pro](https://findapro.lifehappens.org/) **** [![belong.naifa.orghs-fshubfslogo_NAIFA_white](https://lhc.naifa.org/hs-fs/hubfs/social-suggested-images/belong.naifa.orghs-fshubfslogo_NAIFA_white.png?width=140&height=109&name=belong.naifa.orghs-fshubfslogo_NAIFA_white.png) ![logo_NAIFA_NEW](https://lhc.naifa.org/hs-fs/hubfs/logo_NAIFA_NEW.png?width=100&height=73&name=logo_NAIFA_NEW.png) ](https://lhc.naifa.org/) [**](https://lhc.naifa.org/lecpblog/using-a-medicaid-compliant-annuity-to-spend-down-countable-iras#tmpmodule_1610372601348145) - [Centers Home](https://centers.naifa.org/centers) - [LHC Home](https://lhc.naifa.org) - LHC Collectives - [Limited and Extended Care Planning Collective](https://lhc.naifa.org/lecp) - [Medicare Collective](https://lhc.naifa.org/medicare) - Advisory Councils - [Limited and Extended Care Planning Advisory Council](https://lhc.naifa.org/advisory-council) - [Medicare Advisory Council](https://lhc.naifa.org/mc-advisory-council) - Advocacy - [Limited and Extended Care Planning Legislative Working Group](https://lhc.naifa.org/legislative-working-group) - [Medicare Legislative Working Group](https://lhc.naifa.org/medicare-legislative-working-group) - [Advocacy Action Center](https://advocacy.naifa.org/news) - Events - [Inside the New NAIFA Medicare Collective Working Group webinar recording](https://vimeo.com/1211793994/19889c51bc?share=copy&fl=sv&fe=ci) - [Medicare Collective Impact Day 2026 Recording](https://belong.naifa.org/navigating-disruption-and-market-contraction-in-medicare-business-in-2026-and-beyond) - [Peak 65 Series: Impact Day for Lifetime Healthcare Recording](https://lhc.naifa.org/peak65) - [Limited and Extended Care Planning Archives](https://lhc.naifa.org/archives) - [2025 LECP Impact Day Recording](https://vimeo.com/1138688419/b50a406b29?share=copy&fl=sv&fe=ci) - [LHC Webinars](https://lhc.naifa.org/archives) - Blogs - [Limited and Extended Care Planning Blog](https://lhc.naifa.org/lecpblog) - [Medicare Blog](https://lhc.naifa.org/mcblog) ** ![LHC-header](https://lhc.naifa.org/hs-fs/hubfs/LHC-header.png?width=1920&height=960&name=LHC-header.png) # **Limited and Extended Care Planning Collective** The LECP Collective empowers professionals to network with solution and service providers to share best practices, directly access subject matter experts, research, training and resources; and provide thought leadership so we may continue to address the changing needs of the market. ###### 3 min read # [Using a Medicaid Compliant Annuity to Spend Down Countable IRAs](https://lhc.naifa.org/lecpblog/using-a-medicaid-compliant-annuity-to-spend-down-countable-iras) By [The Krause Agency](https://lhc.naifa.org/lecpblog/author/the-krause-agency) on 10/24/25 8:00 AM ###### Topics: [Retirement Planning](https://lhc.naifa.org/lecpblog/topic/retirement-planning) [Life Insurance & Annuities](https://lhc.naifa.org/lecpblog/topic/life-insurance-annuities) [Medicaid](https://lhc.naifa.org/lecpblog/topic/medicaid) [Limited & Extended Care Planning Center](https://lhc.naifa.org/lecpblog/topic/limited-extended-care-planning-center) [Knowledge Centers](https://lhc.naifa.org/lecpblog/topic/knowledge-centers) ![](https://lhc.naifa.org/hubfs/AI-Generated%20Media/Images/The%20image%20depicts%20a%20modern%20conference%20room%20filled%20with%20professionals%20engaged%20in%20discussion%20Attendees%20a%20diverse%20group%20of%20men%20and%20women%20in%20business%20attire%20are%20seated%20around%20a%20sleek%20oval%20table%20some%20taking%20notes%20on%20laptops%20while%20others%20converse%20animatedl-1.png) Retirement accounts are among the most common assets seniors hold, making it essential to understand how they fit into crisis Medicaid planning. If your client or their spouse owns an IRA that’s considered countable in their state, it must be eliminated before they can qualify for Medicaid. However, liquidating an IRA can trigger significant tax consequences. Fortunately, your client can avoid this by transferring IRA funds into a Medicaid Compliant Annuity (MCA) as part of their Medicaid spend-down strategy. ### Are IRAs Countable or Exempt? | ![Nate Ziolkowski](https://lhc.naifa.org/hs-fs/hubfs/Nate%20Ziolkowski.jpg?width=212&height=212&name=Nate%20Ziolkowski.jpg) | | --- | | Nate Ziolkowski  Medicaid Annuity Sales Manager Krause Agency |   Every state treats IRAs differently for Medicaid purposes. Some classify them as countable assets, while others exempt them if they meet certain requirements, such as being in payout status. Knowing how your state categorizes IRAs is the first step in determining the best planning approach. **IRAs belonging to both spouses are countable:** AL, AR, AZ, CO, AT, HI, IA, IL, IN, LA, MA, MD, ME, MI, MN, MO, MT, NC, NE, NH, NJ, NM, NV, OK, OR, SD, TN, UT, VA, WA **IRAs belonging to the community spouse are exempt:** AK, DE, KS, PA, WI, WV, WY **IRAs belonging to both spouses are exempt*:** CA, DC, FL, GA, ID, KY, MS, ND, NY, OH, RI, SC, TX, VT **In some states, an IRA is only exempt if the owner is taking their RMDs.* ### The Consequences of Liquidating an IRA When a client liquidates their IRA, the entire balance becomes taxable income in the year it’s received. This often results in: - A higher income tax rate for that year - Possible taxation of Social Security benefits - Increased Medicare Part B and Part D premiums In short, cashing out can create a ripple effect of tax burdens, just when your client can least afford it. **That’s where a Medicaid Compliant Annuity can help.** ### Transferring IRA Funds to a Medicaid Compliant Annuity If your client’s IRA is countable, funding it into a tax-qualified MCA allows them to preserve assets while avoiding immediate taxation. The transfer itself is not a taxable event. Instead, income taxes are applied over each calendar year as annuity payments are made. Choosing a longer annuity term can spread out the tax impact and enhance the financial benefit for the client. ### Eliminating Countable IRAs for Medicaid When it comes to crisis Medicaid planning, retirement accounts present both challenges and opportunities. For clients in states where IRAs are countable, converting those funds into a Medicaid Compliant Annuity is often the best path forward. This strategy allows clients to: - Preserve retirement savings - Minimize tax exposure - Qualify for Medicaid faster As an advisor, understanding how IRAs interact with Medicaid rules positions you as a knowledgeable and trusted resource. ### Partner with Experts in Medicaid Planning Navigating Medicaid’s complex asset rules doesn’t have to be overwhelming. At Krause Agency, we help agents implement strategies that protect clients’ wealth and secure eligibility. [Have questions about using an MCA in your client’s plan? Book a call with our team to get expert guidance and start putting these strategies into action.](https://www.krauseagency.com/book-a-call/) - [Tweet](https://twitter.com/share) # TOPIC LIST : - [Limited & Extended Care Planning Center (81)](https://lhc.naifa.org/lecpblog/tag/limited-extended-care-planning-center) - [Long-Term Care (81)](https://lhc.naifa.org/lecpblog/tag/long-term-care) - [Knowledge Centers (25)](https://lhc.naifa.org/lecpblog/tag/knowledge-centers) - [Long-Term Care Insurance (21)](https://lhc.naifa.org/lecpblog/tag/long-term-care-insurance) - [Extended Care (19)](https://lhc.naifa.org/lecpblog/tag/extended-care) - [Potential Partners for Advisors (17)](https://lhc.naifa.org/lecpblog/tag/potential-partners-for-advisors) - [Life Insurance & Annuities (13)](https://lhc.naifa.org/lecpblog/tag/life-insurance-annuities) - [Limited Care (13)](https://lhc.naifa.org/lecpblog/tag/limited-care) - [Webinar (13)](https://lhc.naifa.org/lecpblog/tag/webinar) - [Financial Planning (10)](https://lhc.naifa.org/lecpblog/tag/financial-planning) - [Insurance (9)](https://lhc.naifa.org/lecpblog/tag/insurance) - [Medicaid (8)](https://lhc.naifa.org/lecpblog/tag/medicaid) - [Planning in Advance (7)](https://lhc.naifa.org/lecpblog/tag/planning-in-advance) - [Retirement Planning (7)](https://lhc.naifa.org/lecpblog/tag/retirement-planning) - [Reverse Mortgages (7)](https://lhc.naifa.org/lecpblog/tag/reverse-mortgages) - [State Advocacy (7)](https://lhc.naifa.org/lecpblog/tag/state-advocacy) - [Retirement (6)](https://lhc.naifa.org/lecpblog/tag/retirement) - [Legislation & Regulations (5)](https://lhc.naifa.org/lecpblog/tag/legislation-regulations) - [Medicare (5)](https://lhc.naifa.org/lecpblog/tag/medicare) - [Technology (5)](https://lhc.naifa.org/lecpblog/tag/technology) - [Federal Advocacy (4)](https://lhc.naifa.org/lecpblog/tag/federal-advocacy) - [Short-Term Insurance (4)](https://lhc.naifa.org/lecpblog/tag/short-term-insurance) - [Advanced Planning (3)](https://lhc.naifa.org/lecpblog/tag/advanced-planning) - [Financial Wellness (3)](https://lhc.naifa.org/lecpblog/tag/financial-wellness) - [Lifetime Healthcare Center (3)](https://lhc.naifa.org/lecpblog/tag/lifetime-healthcare-center) - [Professional Development (3)](https://lhc.naifa.org/lecpblog/tag/professional-development) - [Research/Trends (3)](https://lhc.naifa.org/lecpblog/tag/research-trends) - [Tax Benefits (3)](https://lhc.naifa.org/lecpblog/tag/tax-benefits) - [caregiving (3)](https://lhc.naifa.org/lecpblog/tag/caregiving) - [Advisor Today (2)](https://lhc.naifa.org/lecpblog/tag/advisor-today) - [Advocacy (2)](https://lhc.naifa.org/lecpblog/tag/advocacy) - [Financial Literacy (2)](https://lhc.naifa.org/lecpblog/tag/financial-literacy) - [Financial Security (2)](https://lhc.naifa.org/lecpblog/tag/financial-security) - [Group & Employee Benefits (2)](https://lhc.naifa.org/lecpblog/tag/group-employee-benefits) - [Grow Your Business (2)](https://lhc.naifa.org/lecpblog/tag/grow-your-business) - [Health Care (2)](https://lhc.naifa.org/lecpblog/tag/health-care) - [Podcast (2)](https://lhc.naifa.org/lecpblog/tag/podcast) - [Press Release (2)](https://lhc.naifa.org/lecpblog/tag/press-release) - [#NAIFAProud (1)](https://lhc.naifa.org/lecpblog/tag/naifaproud) - [Apex (1)](https://lhc.naifa.org/lecpblog/tag/apex) - [Artificial Intelligence (1)](https://lhc.naifa.org/lecpblog/tag/artificial-intelligence) - [California (1)](https://lhc.naifa.org/lecpblog/tag/california) - [Chapter Event (1)](https://lhc.naifa.org/lecpblog/tag/chapter-event) - [Continuing Education (1)](https://lhc.naifa.org/lecpblog/tag/continuing-education) - [Family Caregivers Awareness (1)](https://lhc.naifa.org/lecpblog/tag/family-caregivers-awareness) - [Financial Gerontology (1)](https://lhc.naifa.org/lecpblog/tag/financial-gerontology) - [Gerontology/Aging (1)](https://lhc.naifa.org/lecpblog/tag/gerontology-aging) - [LIMRA (1)](https://lhc.naifa.org/lecpblog/tag/limra) - [Leaders (1)](https://lhc.naifa.org/lecpblog/tag/leaders) - [Loyal Member Profile (1)](https://lhc.naifa.org/lecpblog/tag/loyal-member-profile) - [Marketing (1)](https://lhc.naifa.org/lecpblog/tag/marketing) - [Members (1)](https://lhc.naifa.org/lecpblog/tag/members) - [Membership (1)](https://lhc.naifa.org/lecpblog/tag/membership) - [NAIFA Partner (1)](https://lhc.naifa.org/lecpblog/tag/naifa-partner) - [Prospecting (1)](https://lhc.naifa.org/lecpblog/tag/prospecting) - [Retirement Plans (1)](https://lhc.naifa.org/lecpblog/tag/retirement-plans) - [Standard of Care & Consumer Protection (1)](https://lhc.naifa.org/lecpblog/tag/standard-of-care-consumer-protection) - [State-Facilitated Retirement Plans (1)](https://lhc.naifa.org/lecpblog/tag/state-facilitated-retirement-plans) - [Tax Savings (1)](https://lhc.naifa.org/lecpblog/tag/tax-savings) - [Technology Tools (1)](https://lhc.naifa.org/lecpblog/tag/technology-tools) - [Underwriting & Risk Classification (1)](https://lhc.naifa.org/lecpblog/tag/underwriting-risk-classification) - [Washington (1)](https://lhc.naifa.org/lecpblog/tag/washington) ###### [** Previous Post](https://lhc.naifa.org/lecpblog/oneamerica-launches-caregiving-conversations-podcast) [![](https://lhc.naifa.org/hubfs/AI-Generated%20Media/Images/A%20woman%20sits%20in%20a%20recording%20studio%20in%20front%20of%20a%20computer%20and%20a%20podcast%20microphone.png) ](https://lhc.naifa.org/lecpblog/oneamerica-launches-caregiving-conversations-podcast) ###### [ONEAMERICA LAUNCHES "CAREGIVING CONVERSATIONS" PODCAST](https://lhc.naifa.org/lecpblog/oneamerica-launches-caregiving-conversations-podcast) ###### [Next Post **](https://lhc.naifa.org/lecpblog/unlock-new-opportunities-pairing-short-term-care-with-medicare-advantage-for-stronger-client-protection) [![](https://lhc.naifa.org/hubfs/AI-Generated%20Media/Images/A%20vibrant%20conference%20room%20filled%20with%20professionals%20engaged%20in%20animated%20discussions%20A%20large%20screen%20at%20the%20front%20displays%20the%20phrase%20Unlock%20New%20Opportu-4.png) ](https://lhc.naifa.org/lecpblog/unlock-new-opportunities-pairing-short-term-care-with-medicare-advantage-for-stronger-client-protection) ###### [Unlock New Opportunities: Pairing Short-Term Care with Medicare Advantage for Stronger Client Protection](https://lhc.naifa.org/lecpblog/unlock-new-opportunities-pairing-short-term-care-with-medicare-advantage-for-stronger-client-protection) ### Featured ### Sign up for updates ### SIGN UP FOR UPDATE Our Key Contributors ## **Sponsors** [ ![AGIS_Network_logo](https://lhc.naifa.org/hs-fs/hubfs/AGIS_Network_logo.jpg?width=200&height=72&name=AGIS_Network_logo.jpg) ](https://www.agisnetwork.com/) [![amada](https://lhc.naifa.org/hs-fs/hubfs/Amada-logo.png?width=220&name=Amada-logo.png) ](https://www.amadaseniorcare.com/)[![Coventry](https://www.coventry.com/wp-content/uploads/2023/10/logo.webp) ](https://www.coventry.com/) [![EquiTrust](https://lhc.naifa.org/hs-fs/hubfs/equaltrust.png?width=180&height=50&name=equaltrust.png) ](https://www.equitrust.com/) [![ILTCI](https://lhc.naifa.org/hs-fs/hubfs/ILTCI-1.png?width=130&name=ILTCI-1.png) ](https://iltciconf.org/) [![Krause](https://lhc.naifa.org/hs-fs/hubfs/Krause-FullColor-Stacked.png?width=100&height=98&name=Krause-FullColor-Stacked.png) ](https://www.krauseagency.com/) [![LTCI Partners](https://lhc.naifa.org/hs-fs/hubfs/LTCIpartners.png?width=160&name=LTCIpartners.png) ](https://www.ltcipartners.com/) [![LTC Solutions](https://lhc.naifa.org/hs-fs/hubfs/Corporate%20Partner%20Newsletter/LTC.jpg?width=200&height=35&name=LTC.jpg) ](https://www.ltc-solutions.com/) [![OneAmerica](https://lhc.naifa.org/hs-fs/hubfs/OneAmerica-Financial.png?width=180&height=46&name=OneAmerica-Financial.png) ](https://www.oneamerica.com/) [![Senior Market Sales](https://lhc.naifa.org/hs-fs/hubfs/SeniorMarketSales_Logo.jpg?width=140&height=51&name=SeniorMarketSales_Logo.jpg) ](https://www.seniormarketsales.com/) [![LimitedExtCareCenterwhite-3](https://lhc.naifa.org/hs-fs/hubfs/LimitedExtCareCenterwhite-3.png?width=300&height=96&name=LimitedExtCareCenterwhite-3.png) ![LimitedExtCareCenterGreen](https://lhc.naifa.org/hs-fs/hubfs/LimitedExtCareCenterGreen.png?width=300&height=96&name=LimitedExtCareCenterGreen.png) ](https://lecp.naifa.org/) [**](https://lhc.naifa.org/lecpblog/using-a-medicaid-compliant-annuity-to-spend-down-countable-iras#tmpmodule_699579294) - [Centers Home](https://centers.naifa.org/centers) - [LHC Home](https://lhc.naifa.org) - LHC Collectives - [Limited and Extended Care Planning Collective](https://lhc.naifa.org/lecp) - [Medicare Collective](https://lhc.naifa.org/medicare) - Advisory Councils - [Limited and Extended Care Planning Advisory Council](https://lhc.naifa.org/advisory-council) - [Medicare Advisory Council](https://lhc.naifa.org/mc-advisory-council) - Advocacy - [Limited and Extended Care Planning Legislative Working Group](https://lhc.naifa.org/legislative-working-group) - [Medicare Legislative Working Group](https://lhc.naifa.org/medicare-legislative-working-group) - [Advocacy Action Center](https://advocacy.naifa.org/news) - Events - [Inside the New NAIFA Medicare Collective Working Group webinar recording](https://vimeo.com/1211793994/19889c51bc?share=copy&fl=sv&fe=ci) - [Medicare Collective Impact Day 2026 Recording](https://belong.naifa.org/navigating-disruption-and-market-contraction-in-medicare-business-in-2026-and-beyond) - [Peak 65 Series: Impact Day for Lifetime Healthcare Recording](https://lhc.naifa.org/peak65) - [Limited and Extended Care Planning Archives](https://lhc.naifa.org/archives) - [2025 LECP Impact Day Recording](https://vimeo.com/1138688419/b50a406b29?share=copy&fl=sv&fe=ci) - [LHC Webinars](https://lhc.naifa.org/archives) - Blogs - [Limited and Extended Care Planning Blog](https://lhc.naifa.org/lecpblog) - [Medicare Blog](https://lhc.naifa.org/mcblog) ** [**](https://www.facebook.com/NAIFANational) [**](https://twitter.com/naifa) [**](https://www.instagram.com/onenaifa/) [**](https://www.linkedin.com/company/naifa) [**](https://www.youtube.com/user/naifavideo) [**](https://soundcloud.com/user/naifavideo) [![LifetimeHealthcare_w](https://lhc.naifa.org/hs-fs/hubfs/Centers_LifetimeHealthcare_w.png?width=200&height=71&name=Centers_LifetimeHealthcare_w.png "LifetimeHealthcare_w")](http://naifa.org) - [Legal & Privacy ](https://solutions.naifa.org/legal-and-privacy) Copyright © 2020 NAIFA **National Association of Insurance and Financial Advisors 1000 Wilson Boulevard, Suite 1890 Arlington, VA 22209** Phone: 877-866-2432 [lhc@naifa.org](mailto:lhc@naifa.org) **