I have two annuities. If my wife or I need to go into a nursing home, would we have to cash in the annuities to apply toward nursing home expenses? I have been told that, because the annuities are considered insurance policies, we would not need to cash them in for nursing home expenses. Please clarify for us. Thank you.


In most states, annuities are considered assets and the proceeds from the annuity would have to be spent down to the Medicaid asset limits before you or your wife would be eligible for benefits. Otherwise, anyone could shelter assets by investing them in an annuity.

However immediate annuities, those in an irrevocable payment mode, are counted as income rather than as assets because they can no longer be cashed out. The purchase of the immediate annuity or the transition into payment mode must meet certain requirements in order to not be considered a disqualifying transfer of assets. And, of course, increased income also can affect Medicaid eligibility in certain situations.

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