Medicaid Compliant Annuities in Virginia: The Crisis Planning Tool Few Families Hear About Until It Matters

When one spouse moves into a nursing home, many couples discover that Medicaid expects them to spend down their savings first. For the spouse still at home, that can feel like watching a lifetime of careful saving disappear. A Medicaid compliant annuity is one lawful way to change that outcome, yet many families first learn about it in the middle of a crisis.

What makes an annuity “Medicaid compliant”?

An annuity is a contract with an insurance company. You pay a lump sum, and the company pays you back in regular installments. Under federal law, buying one is treated as giving away money for less than it is worth unless it meets specific rules. Under 42 U.S.C. § 1396p(c)(1)(F) and (G), the annuity generally must be:

• Irrevocable and non-assignable, so it cannot be cashed out or handed to someone else
• Actuarially sound, meaning payments end within the buyer’s life expectancy under Social Security actuarial tables
• Paid in equal amounts, with no deferral and no balloon payments
• Set up to name the state as a remainder beneficiary, either first in line or second behind the community spouse or a minor or disabled child

If any piece is missing, Medicaid can impose a penalty period that delays coverage right when the family needs it most.

How it can protect the spouse at home

Medicaid lets the spouse who stays home keep a portion of the couple’s countable resources. In 2026, the federal ceiling on that allowance is $162,660, according to the Centers for Medicare & Medicaid Services. Savings above the allowance usually have to go toward care costs.

Here is where an annuity can help. The spouse at home can use excess savings to buy a compliant annuity in his or her own name. Instead of being spent down, that money becomes a steady monthly paycheck for the person who still has bills to pay, a house to keep up, and a life to live. In 2026, the maximum monthly maintenance needs allowance is generally $4,066.50, and annuity income paid to the at-home spouse can reduce or eliminate the share of the nursing home spouse’s income that would otherwise be allocated to the at-home spouse.

Not every annuity, or every couple, is a fit

The rules here are unforgiving. A payout term that runs too long, a contract feature that allows changes, or a missing beneficiary designation can undo the whole plan. The added income may also affect taxes and how much support the at-home spouse can receive from the applicant’s income. For some couples, a different strategy works better. A compliant annuity is a tool, not a cure-all.

Before You Spend Down Another Dollar, Let’s Talk

If your family is facing a nursing home admission, please do not start draining accounts until you know all of your options. At The Law Office of Angela N. Manz, we sit down with each couple, look at the full financial picture, and build a plan around it. Our Virginia Beach Medicaid planning attorneys can tell you whether an annuity belongs in yours. Reach out to us this week, and let’s work through your situation together.

Source:

medicaid.gov/federal-policy-guidance/downloads/cib04272026.pdf