Medicaid Planning with Annuities- Buyer Beware

I was just reading a national long-term care website advocating the use of annuities for Medicaid planning purposes.  The website stated that in the case of a married couple, where the institutionalized spouse (that is the one in a long-term care facility) has been approved for Medicaid, instead of spending down his spousal share, he can simply give the money to his wife and have her purchase an annuity for her benefit.

This assertion is false in Ohio and provides a powerful example of how important it is to consult with an attorney knowledgeable in Ohio Medicaid law before proceeding with any planning strategies.  An institutionalized spouse can not convert his spousal share to benefit his wife after the date of institutionalization.  This would likely result in an improper transfer and a penalty period for the institutionalized spouse- meaning Medicaid would not cover his long-term care costs for a set time period.

There are very specific rules that one must follow to purchase annuities and not incur a Medicaid penalty period in Ohio.  More importantly perhaps, one must know when purchasing an annuity for Medicaid Planning purposes is advantageous and when it is not.