Health Affairs

Health Affairs, 25, no. 2 (2006): 444-451 doi: 10.1377/hlthaff.25.2.444 © 2006 by Project HOPE	New Online   Getting Health Reform Done   After the State of the Union   Incremental Reform   E-Health in Developing World   Most-Read Articles in 2009

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The Cost Of Medicaid Annuities

Robert A. Levy, John A. Nyman, Mary Gabay, William Riley and Roger Feldman

Medicaid annuities are annuities that long-term care recipients use to shelter assets, thereby qualifying them early for Medicaid eligibility. As such, these annuities have the potential to increase Medicaid costs. This study estimates the cost of annuities to the Medicaid program. From a sample of Medicaid applications in five states, we found the rate at which annuities were used and simulated their cost to Medicaid. We estimated that in 2004, Medicaid annuities cost Medicaid about $197 million, which represented a small proportion of Medicaid’s almost $50 billion cost for nursing home care.

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