House bill could change how Medicaid treats annuities

Rep. Markwayne Mullin, R-Okla., is getting more attention for an effort to reduce use of annuities in Medicaid planning arrangements.

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Medicaid is a program that uses a combination of federal and state funding to pay for health care for poor people, and for nursing home care for residents who meet state nursing home benefits eligibility guidelines.

Medicaid planning is the practice of structuring an individual or couple’s assets in such a way that the individual or couple can qualify for Medicaid nursing home benefits.

Mullin recently unveiled a discussion draft version of the Close Annuity Loopholes in Medicaid Act bill. The draft is similar to H.R. 1771, a bill he introduced in the House in 2015.

Both H.R. 1771 and the new discussion draft would change how the Medicaid eligibility review processes treats annuity income. Today, if a couple buys an annuity, and one spouse uses Medicaid nursing home benefits, eligibility reviewers assume that all of the annuity income must go to support the spouse living in the community.

If H.R. 1771 or the new Mullin discussion draft became law, Medicaid eligibility reviewers would assume that a couple could use half of the income from an annuity purchased within the previous five years to pay for long-term care. Eligibility reviewers would still exclude all income from an annuity that was purchased five years or more earlier.

Mullin attracted only one cosponsor, and no hearings for H.R. 1771.