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Understanding the Importance of Insurance for Long-term Care

I recently received the following question from a long term care insurance agent:


I have a client that was told by his attorney that the assets in his IRA and 403(b) accounts, about $500k, are protected and not accessible to Medicaid, and therefore he does not need to buy the LTC insurance (NYS Partnership) that I recommended.

Is the attorney referring to converting these assets into an income stream?

YES – but the income would not be protected.

Would this involve rolling over all assets into a Single Premium Immediate Annuity (SPIA)?


What are the requirements for this? …Is this irrevocable?

There is a need to show that the IRA or 403(b) is in periodic payment status under GIS 98 MA/024.  In New York, most counties will accept the “required minimum distribution” amount under the Internal Revenue Code. Some counties may take a position that the distribution amounts should be determined using the Social Security tables which are not as favorable. The election as to distributions does not have to be irrevocable.

Who receives the income…the client or a Nursing Home?

It is the income of the Medicaid recipient.  As a practical matter, the income would go to the nursing home as an “income spend-down.”

Who receives the remaining money after the death of the client …the family or Medicaid?

The beneficiary designated under the IRA or 403(b) such as family members.  If the estate is named, then Medicaid would be able to make a claim under the Medicaid estate recovery law.

Long Term Care Insurance can protect against a spend-down of the IRA distributions made over the lifetime of the Medicaid recipient.

You care about your loved ones and you want them to have the best possible care. Our law firm is uniquely qualified to provide you with solutions.

This Post Has 2 Comments

  1. hi. could we roll over our ira monies to a bank and place in a money market or cd to avoid social security rmd tables. we live in suffolk county ny. thank you very much. laurie

    1. Ms. Harnisch,

      If you mean to roll over your current IRA account to a different IRA account, then the answer would be no, you cannot avoid RMD by changing the type of account your IRA is in.

      In light of the changes in the IRA laws, it is a good idea to review your planning – or to implement planning if you have not already done so. We would be happy to meet with you in this regard.

      Please contact us at 516-683-1717 and our Intake Coordinator, Ashley, would be happy to assist you.

      Frank Buquicchio

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