Annuities can be problematic for Medicaid applicants for a number of reasons; not the least of which are potential heavy surrender charges if the contract needs to be liquidated. Be wary of insurance agents who will be more than happy to have your grandparents liquidate these annuities so that new ones can be purchased and nice, fat commissions can be paid to the agent.

Here is your answer: The Medicaid applicant is not permitted to retain more than $2,000 in assets. If the annuities are "non-qualified", in other words are not an IRA or other IRS retirement plan then they will be deemed countable assets. In some states IRA's are now considered an asset unless they are being distributed in annuity like fashion.

In many states, including the state of Florida, the spouse not applying for Medicaid (aka the "community spouse") is permitted to retain up to $109,000 in otherwise countable, non-exempt assets. This would include the value of non-qualified annuities.

The best and simplest solution is to change the ownership on the annuities so that grandma is the sole owner of all of them. Make sure that the beneficiaries are also changed so that grandpa doesn't inherit anything if grandma predeceases him and he is disqualified. If the annuities plus other countable, non-exempt exceed $109,500 then you may have to take steps with the excess to shelter it for their benefit.

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