Where to Buy Medicaid Compliant Annuities and What to Know Before You Do

Insurance companies and brokers sell Medicaid compliant annuities, but not all insurers offer them and not all brokers know how to structure them correctly

A Medicaid compliant annuity is sold by the same insurance companies that sell regular annuities — companies like Fidelity, Voya, Equitable, and Transamerica — but only some of their products meet Medicaid's rules. The catch is that many insurance agents and brokers do not specialize in Medicaid planning and may not understand which annuities work for Medicaid purposes or how to set them up so they do not disqualify you from benefits.

You can buy directly from an insurance company's website or through a broker, but the structure matters more than where you buy. An annuity that looks identical to a regular one can either protect your assets for Medicaid or fail to protect them, depending on how it is written. That is why working with someone who has done this before — an elder law attorney, a Medicaid planner, or a broker who specializes in Medicaid annuities — is usually worth the cost.

Key Takeaways

• Major insurance companies sell Medicaid compliant annuities, but you need to confirm the specific product meets your state's Medicaid rules before buying.
• A broker or agent who specializes in Medicaid planning can structure the annuity correctly; a general insurance agent may not know the requirements.
• Your state's Medicaid agency publishes rules about which annuity features are allowed, and these rules vary by state.
• An elder law attorney can review the annuity contract before you sign to make sure it will not disqualify you from Medicaid.
• Some insurance companies charge higher fees or have stricter rules for Medicaid compliant annuities than for regular ones.

Insurance companies that offer Medicaid compliant annuities

The major carriers — Fidelity, Voya, Equitable, Transamerica, Athene, and Allianz — all sell when ready annuities that can be structured to meet Medicaid rules. when ready annuities are the most common type used for Medicaid planning because they convert a lump sum into a stream of monthly payments, which Medicaid counts differently than a savings account.

Not every product from these companies is Medicaid compliant. You have to ask the broker or agent whether the specific annuity you are considering meets your state's Medicaid rules. Some states allow only certain features — for example, some states require the annuity to be non-assignable (meaning you cannot transfer it to someone else), while others do not. Some states require it to be irrevocable (meaning you cannot change or cancel it), while others allow you to keep the right to cancel.

Smaller regional insurers and specialty carriers also sell Medicaid compliant annuities, but they are less common and may have higher fees or longer processing times. Stick with a carrier your broker has worked with before if you can, because they will know exactly what paperwork the company needs and how long approval takes.

Brokers and agents who specialize in Medicaid annuities

A general insurance agent can sell you an annuity, but they may not know whether it meets Medicaid rules in your state. Medicaid planning requires knowledge of federal rules, state-specific rules, and how annuities interact with other assets and income. A mistake in the structure can mean the annuity does not protect your assets the way you intended.

Brokers who specialize in Medicaid annuities have worked with multiple insurance companies and know which products work in which states. They understand the paperwork requirements — for example, some states require a Medicaid agency approval letter before you buy, while others require it after. They also know the common mistakes that disqualify annuities, such as naming the wrong person as beneficiary or including features that Medicaid does not allow.

You can find a Medicaid-focused broker through the National Association of Estate Planners and Councils, through referrals from elder law attorneys in your area, or by asking your state's Medicaid agency for a list of approved vendors. Some brokers charge a flat fee for structuring the annuity; others take a commission from the insurance company. Ask upfront what you will pay and what is included.

Elder law attorneys and Medicaid planners

An elder law attorney can review an annuity contract before you sign it and tell you whether it meets your state's Medicaid rules. They can also advise you on whether an annuity is the right tool for your situation or whether other strategies would work better. This costs money — typically $300 to $1,000 for a contract review — but it can prevent a costly mistake.

A Medicaid planner (sometimes called a certified Medicaid planner or elder law financial advisor) specializes in structuring assets to preserve them for Medicaid purposes. They work with brokers and attorneys to make sure the annuity is set up correctly. Some planners are also licensed insurance agents and can sell the annuity themselves; others only advise and refer you to a broker.

Both attorneys and planners should be familiar with your state's specific Medicaid rules. Medicaid is a state program, and the rules about annuities vary. An attorney licensed in your state is required to give you legal information; a planner does not have to be licensed, so ask about their credentials and experience before hiring them.

What to check before you buy from any seller

Before you hand over money, confirm that the seller has checked your state's Medicaid rules. Ask them to show you the specific rule that allows the annuity they are recommending. Your state's Medicaid agency website publishes these rules, usually in a document called the "State Plan" or "Medicaid Manual." If the seller cannot point you to the rule, that is a red flag.

Ask whether the annuity requires state Medicaid approval before or after purchase. Some states require you to get written approval from the Medicaid agency before you buy; others allow you to buy and then report it. Buying without approval in a state that requires it can disqualify you from Medicaid, so this matters.

Confirm the fees. Medicaid compliant annuities sometimes cost more than regular ones because of the extra paperwork and compliance work. Ask for a written breakdown of all fees — the commission the broker takes, any fees the insurance company charges, and any fees for Medicaid compliance review. Compare this to what you would pay for a regular annuity from the same company.

Red flags when choosing a seller

Avoid anyone who promises that an annuity will definitely protect your assets or may provide Medicaid approval. No one can may provide that. Medicaid rules change, and your situation may have details that affect whether an annuity works for you. A responsible seller will say the annuity "may help" or "is designed to" meet Medicaid rules, not that it will.

Be cautious if a seller pushes you to buy quickly or says you have a limited time to act. Medicaid annuities do not have important date. If someone creates urgency, they may be more interested in their commission than in your situation.

Do not work with someone who cannot explain how the annuity works or why it meets Medicaid rules. If they use jargon without explaining it, or if they tell you to trust them without showing you the rules, find someone else. You should understand what you are buying and why it matters for Medicaid.

Comparing costs and terms across sellers

The same annuity from the same insurance company can have different costs depending on who sells it to you. A broker who works with many carriers may negotiate better rates than a captive agent who sells only one company's products. But a captive agent may know that company's Medicaid rules inside and out.

Ask each seller for a written quote that shows the monthly payment amount, the total cost, all fees, and the terms (whether it is irrevocable, non-assignable, and so on). Compare these quotes side by side. The lowest cost is not always the best choice if it comes with terms that do not work for your state's Medicaid rules.

Also ask about the insurance company's financial strength. You are buying an annuity because you want the payments to continue for the rest of your life. Check the company's rating with A.M. Best or Standard & Poor's to make sure it is stable. A broker can show you this rating, or you can look it up yourself on the rating agencies' websites.

Frequently Asked Questions

Can I buy a Medicaid compliant annuity online?

Some insurance companies sell annuities directly through their websites, but Medicaid compliant annuities usually require a broker or agent because the structure has to be customized for your state's rules. Buying online without confirming Medicaid compliance is risky. Work with a broker who knows your state's requirements.

Do I need a lawyer to buy a Medicaid annuity?

You do not need a lawyer to buy one, but having an elder law attorney review the contract before you sign is a good idea, especially if you are new to Medicaid planning. The cost is usually $300 to $1,000 and can prevent mistakes that cost much more later.

What if my insurance agent says they do not know about Medicaid annuities?

That is honest of them, and it means you should find someone who does specialize in them. A general insurance agent can sell you an annuity, but they may not structure it correctly for Medicaid. Ask for a referral to a broker or planner who has Medicaid experience.

Can I change my mind after I buy a Medicaid compliant annuity?

That depends on the annuity's terms. Some Medicaid compliant annuities are irrevocable, meaning you cannot cancel or change them once you buy. Others allow you to cancel within a certain period. Ask the seller whether the annuity you are considering is irrevocable before you commit.

How long does it take to buy a Medicaid compliant annuity?

The process usually takes two to four weeks from the time you sign the contract to the time the insurance company issues the annuity and begins payments. If your state requires Medicaid approval before purchase, add another two to four weeks. Ask your broker for a timeline specific to your situation.