Ohio Medicaid Compliant Annuity: Protecting a Spouse's Assets

What a Medicaid-Compliant Annuity Actually Does

When a married couple faces Ohio's Medicaid spend-down, the community spouse — the one staying home — risks losing assets above the Community Spouse Resource Allowance (CSRA) cap of $162,660. A Medicaid-compliant annuity converts countable lump-sum assets into a non-countable income stream for the community spouse, effectively moving money from the "asset" column to the "income" column.

This matters in Ohio because the state enforces an income-first methodology. The community spouse's monthly income is evaluated against the Minimum Monthly Maintenance Needs Allowance (MMMNA) of $2,705 per month (effective July 2026), which can be increased for excess shelter costs up to the $4,066.50 cap effective January 1, 2026, unless a higher amount is ordered through a hearing or court. If the annuity's monthly payout fills that gap, the couple preserves more overall wealth while the applicant spouse qualifies for long-term care Medicaid.

Ohio's Requirements for Compliance

For an annuity to pass Ohio's Medicaid eligibility review at the County Department of Job and Family Services (CDJFS), it must meet every requirement under the Deficit Reduction Act (DRA) of 2005:

• Irrevocable and non-assignable — the owner cannot cancel or transfer the contract
• Actuarially sound — the payout term cannot exceed the community spouse's life expectancy based on the SSA Period Life Table
• Equal monthly payments — no deferred, balloon, or graduated payment schedules
• State named as remainder beneficiary — Ohio must be named as the primary beneficiary up to the total Medicaid benefits paid, or as secondary beneficiary behind a community spouse or minor/disabled child

If the annuity fails any of these tests, the CDJFS treats the full purchase price as an uncompensated transfer — triggering the five-year lookback penalty at the current divisor of $8,669 per month (effective September 1, 2026).

When This Strategy Makes Sense

The compliant annuity is strongest when a couple's countable assets significantly exceed the CSRA maximum. Consider a couple with $350,000 in countable resources on the snapshot date. The community spouse keeps $162,660 under the CSRA. Without planning, the remaining $187,340 must be spent down to $2,000.

Purchasing a Medicaid-compliant annuity for $185,340 with a five-year payout term converts that spend-down obligation into roughly $3,089 per month in income to the community spouse, leaving $2,000 in countable resources. The annuity principal is no longer a countable asset, and the applicant spouse can qualify based on the $2,000 resource limit if all other eligibility requirements are met.

The trade-off: the income from the annuity counts toward the community spouse's total monthly income, potentially reducing how much of the institutionalized spouse's income can be diverted to them. Ohio's income-first rule means income transfers happen before any CSRA expansion gets considered.

Critical Timing and Pitfalls

Disclose and review the annuity. The annuity should be disclosed to the CDJFS and reviewed for compliance before the family relies on it. A noncompliant purchase can be treated as an improper transfer.

Life expectancy tables matter. If the annuity payout period exceeds the community spouse's life expectancy by even one month, Ohio treats the entire purchase as a penalized transfer. Work with the SSA Period Life Table that was current at the date of purchase.

Not a DIY strategy. Unlike many spend-down steps covered in our Ohio Medicaid Long-Term Care & Asset Protection Guide, a compliant annuity requires precise actuarial calculations and an insurance product that meets every DRA requirement. Most families use an elder law attorney or a Medicaid planning specialist to structure the purchase.

The Bottom Line

A Medicaid-compliant annuity is one of the most powerful — and most technical — asset protection tools available to Ohio couples facing long-term care costs. It works by converting excess countable resources into an income stream that the community spouse can live on, while the applicant qualifies for Medicaid. The complete Ohio Medicaid guide walks through when an annuity makes sense alongside other spend-down strategies like prepaid funeral contracts, home modifications, and debt reduction.

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