Nursing homes in the Lehigh Valley cost $140,000 – $180,000 a year. Medicare and health insurance don’t pay for this. Fortunately, Medicaid does. But impoverishment is the price of admission into the Medicaid program. While most spend themselves broke, a savvy few manage to qualify for Medicaid without forfeiting their estate. One way for a married person to do that is to use the couple’s excess at-risk assets to buy a Medicaid-compliant single premium immediate annuity, or “CS SPIA.” Annuity payments go to the Medicaid applicant’s “community” spouse.

Here’s how it works. Instead of a married couple spending down excess at-risk assets, the money is paid instead as a lump-sum premium to an insurance company. Beginning the following month, the insurance company makes monthly payments to the community spouse for a fixed term, perhaps two years. The payments, made in equal monthly installments, represent a return of principal together with some interest. They are almost completely tax-free. The institutionalized spouse seeking Medicaid qualifies for benefits the day after the CS SPIA is purchased! The assets that would have been paid to the nursing home are instead preserved for the community spouse.