Health Affairs, 25, no. 2 (2006): 444-451 doi: 10.1377/hlthaff.25.2.444 © 2006 by Project HOPE	New Online   Pay Cuts For Medicare Docs   Access To Care Woes   Public Coverage More Efficient   Empowering Consumers

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The Cost Of Medicaid Annuities

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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