Medicaid Compliant Annuity Calculator (2026): Close the Community Spouse Income Gap
When one spouse moves into a nursing home and applies for Medicaid long-term care coverage, the other spouse — the one who stays home — is the person most families are trying to protect. Medicaid’s spousal impoverishment rules let that community spouse keep a set amount of assets and a set amount of monthly income. In 2026 the asset allowance tops out at $162,660 and the monthly income floor tops out at $4,066.50. Everything above the asset allowance has to be spent down before benefits begin.
A Medicaid compliant annuity is the tool most elder-law attorneys use to solve the second half of that problem: it converts countable assets that would otherwise have to be spent on nursing home care into a stream of monthly income for the community spouse, and — when it is drafted correctly — it stops counting as an asset at all. This calculator estimates the three numbers families need before they talk to an attorney: the monthly income gap the community spouse is facing, the annuity premium required to fill it, and how much of the couple’s assets the annuity protects from the spend-down.
Medicaid Compliant Annuity Calculator
2026 spousal impoverishment standards — income gap, annuity premium and asset protection
A $246,000 irrevocable annuity fits inside the $335,340 of assets over the allowance and pays the community spouse $1,532.35 a month for life-expectancy.
Life expectancy 17.1 years · $6.23 of monthly income per $1,000 of premium · 7.5% annual payout rate · $1,340.00 diverted from the applicant’s income to the community spouse.
| Community spouse income | Diverted from applicant | Total income | Monthly gap | Annuity premium needed |
|---|---|---|---|---|
| $0 | $1,340.00 | $1,340.00 | $2,726.50 | $438,000 |
| $1,000 | $1,340.00 | $2,340.00 | $1,726.50 | $278,000 |
| $2,000 | $1,340.00 | $3,340.00 | $726.50 | $117,000 |
| $3,000 | $1,066.50 | $4,066.50 | $0.00 | $0 |
| $4,000 | $66.50 | $4,066.50 | $0.00 | $0 |
The calculator is a planning estimate, not a legal opinion. Every state runs its own Medicaid program, its own CSRA cap, and its own rules about whether an irrevocable annuity is an available resource. Use the numbers here to frame the conversation with an elder-law attorney who practices in your state.
How a Medicaid Compliant Annuity Closes the Spousal Income Gap
Medicaid does not look at a married couple the same way it looks at a single applicant. When one spouse needs nursing home care, the spouse who stays in the community is allowed to keep a share of the couple’s countable assets — the community spouse resource allowance (CSRA) — and is entitled to a minimum monthly income, the maximum monthly maintenance needs allowance (MMMNA). The asset half is a one-time calculation. The income half is where families get stuck, because Social Security alone frequently lands below the floor and the gap can run $1,000 to $2,500 a month.
The classic fix is to buy a single-premium immediate annuity with the assets that would otherwise be spent down. Because the contract is irrevocable, non-assignable, guarantees equal monthly payments, is priced to return the premium within the annuitant’s life expectancy, and names the state Medicaid agency as remainder beneficiary, most states do not count it as an available resource. The assets leave the countable pile, and the payments arrive as income to the community spouse every month. In effect, money that would have been spent on the nursing home pays for the healthy spouse’s living expenses instead.
What the Calculator Is Doing (and Why Each Card Matters)
The tool runs the same arithmetic an elder-law office runs on a legal pad, in the same order:
- Community spouse resource allowance. Half the countable assets, floored at $32,532 and capped at your state’s CSRA maximum (the federal maximum is $162,660 in 2026). A few states set lower caps — Illinois $143,172, South Carolina $66,480, Washington $72,529 — so the state selector changes the protected amount.
- Income diversion. The applicant’s income is used first to bring the community spouse up to the maintenance allowance, minus the applicant’s own personal needs allowance. Whatever is left over goes to the nursing home as the patient pay amount.
- Income gap. The difference between the floor (default $4,066.50, the maximum a fair hearing can award) and the couple’s income after diversion. This is the number the annuity has to replace.
- Annuity premium. Computed as a period-certain payout over the community spouse’s life expectancy at the crediting rate you select. A 70-year-old woman has a life expectancy near 17 years, which produces roughly $6.23 of monthly income per $1,000 of premium at 3%.
- Assets still over the allowance. Any excess left after the annuity is purchased. That remainder still has to be spent on care or converted to exempt assets.
- Private-pay months. How many months of nursing home cost the leftover assets would cover — useful for timing the Medicaid application.
2026 Spousal Impoverishment Numbers You Need
These are the published 2026 figures used by the calculator, from the CMS 2026 SSI and Spousal Impoverishment Standards bulletin. States may adopt lower amounts, so confirm your state’s numbers before relying on them.
| 2026 standard | Amount |
|---|---|
| Community spouse resource allowance (CSRA) minimum / maximum | $32,532 / $162,660 |
| Monthly maintenance needs allowance (MMMNA) state minimum, effective July 1 2026 | $2,705 (Alaska $3,381.25, Hawaii $3,111.25) |
| MMMNA maximum — the fair-hearing ceiling | $4,066.50 per month |
| Community spouse monthly housing allowance | $811.50 |
| Income cap for income-cap states (300% of the SSI federal benefit rate) | $2,982 per month |
| Applicant’s own resource allowance | $2,000 |
| Home equity limit (minimum / maximum) | $752,000 / $1,130,000 |
| Applicant’s personal needs allowance (minimum, state-set) | $30 per month |
The Five Rules That Make an Annuity Medicaid-Compliant
An ordinary deferred annuity with a cash surrender value does not protect anything — it is a countable resource that has to be cashed in. To be treated as an unavailable resource for the community spouse in most states, the contract must be all of the following:
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- Immediate. Payments begin right after purchase; there is no accumulation phase to raid.
- Irrevocable and non-assignable. It cannot be cancelled, surrendered, sold, or borrowed against. Principal is only ever reachable through the scheduled payments.
- Fixed and equal. The same payment every month — no lump sums, no escalating or balloon payments.
- Actuarially sound. The payout period cannot exceed the annuitant’s life expectancy, and the payments must return the entire premium within that period. This is the single most common drafting failure.
- State as remainder beneficiary. The state Medicaid agency must be named to receive any unpaid amount at the annuitant’s death (or second in line behind a surviving spouse, minor child, or disabled child).
Miss any one of the five and the money reverts to a countable asset, the spend-down comes back, and the annuity has to be liquidated — usually at a loss. That is why these contracts are assembled by elder-law attorneys and annuity wholesalers who do Medicaid annuities routinely, not bought off a shelf.
How Medicaid Treats Each Asset in 2026
Life insurance sits in a strange place in this list, and it is the asset most often misunderstood by the families we quote coverage for.
| Asset | Countable for long-term care Medicaid? |
|---|---|
| Compliant immediate annuity (irrevocable, actuarially sound, state remainder beneficiary) | No — treated as an unavailable resource |
| Revocable or cash-surrender annuity | Yes — counted at cash surrender value |
| Life insurance with a cash value | Yes — the cash surrender value counts above the state’s small-policy exemption, commonly $1,500 |
| Term life insurance or a policy with no cash value | No — never counted |
| Primary residence where the community spouse still lives | No — exempt, but equity above $752,000 counts |
| Irrevocable prepaid funeral or burial contract | No — exempt within state limits |
What a Compliant Annuity Costs Per $1,000 of Monthly Income
The premium needed is driven by the annuitant’s age and sex, because both drive life expectancy — a shorter payout window means a higher cost per dollar of monthly income. The table below uses the same life-expectancy payout model as the calculator, at a 3% crediting rate.
| Community spouse age | Premium for $1,000/mo — male | Premium for $1,000/mo — female |
|---|---|---|
| 60 | $197,000 | $212,000 |
| 65 | $171,000 | $187,000 |
| 70 | $145,000 | $161,000 |
| 75 | $119,000 | $134,000 |
| 80 | $94,000 | $108,000 |
| 85 | $72,000 | $85,000 |
The crediting rate matters too, but less than age. At the calculator’s default profile — a 70-year-old community spouse with a $1,526.50 monthly gap — the same income stream costs $314,000 at 0%, $266,000 at 2%, $246,000 at 3%, and $227,000 at 4%. A higher crediting rate means lower premium and a smaller draw on the protected assets.
Compliant Annuity vs. Long-Term Care Policy vs. Plain Spend-Down
| Strategy | Who it protects | Countable asset? | Liquidity | Best for |
|---|---|---|---|---|
| Compliant immediate annuity | Community spouse income | No, if all five rules are met | None — must be irrevocable | Closing a monthly income gap in a two-spouse case |
| Hybrid life plus LTC policy | The insured’s own care costs | Yes — cash value counts | Cash value is accessible | Funding your own care before Medicaid, not spend-down protection |
| Plain spend-down on care | No one | n/a | Full | Applicants with no spouse to protect |
| Irrevocable funeral trust | Final expenses | No, within limits | None | A small exempt bucket inside the spend-down |
Worked Example: A $1,526 Monthly Gap in 2026
Take the calculator’s default case. A married couple has $500,000 in countable assets. The spouse in the nursing home receives $1,400 a month; the healthy spouse receives $1,200. The couple lives at the federal maximum, and the attorney is aiming for the fair-hearing maximum maintenance allowance of $4,066.50.
The protected amount is $162,660 plus the applicant’s own $2,000 allowance — $164,660 — leaving $335,340 over the limit. Of the applicant’s income, $1,340 is diverted to the community spouse (holding back a $60 personal needs allowance), which brings total household income to $2,540. The gap to the $4,066.50 floor is $1,526.50 a month.
A 70-year-old community spouse has a life expectancy of about 17.1 years. Priced as a period-certain payout at 3%, that gap is filled by a $246,000 full and immediate annuity paying $1,532.35 a month. The annuity is inside the $335,340 of excess assets, so the plan funds cleanly. Total protected: $410,660, or 82.1% of the couple’s countable assets. About $89,340 remains over the allowance — roughly 8.9 months of private-pay nursing home cost at $10,000 a month — and that is the remainder that still has to be spent or re-titled before the application is filed.
Video: How a Medicaid Compliant Annuity Works
Five Mistakes That Turn a Protected Annuity Into a Countable Asset
- Buying a payout longer than life expectancy. If the schedule outlives the annuitant’s estimated lifespan, the annuity fails the actuarially sound test and counts in full.
- Naming the wrong remainder beneficiary. The state must be named — or named second behind a spouse, minor child, or disabled child where those exceptions apply.
- Purchasing after the Medicaid application is filed. The annuity has to be part of the plan that is submitted, and it must be disclosed. Transfers to a family member inside the 60-month look-back create a penalty period instead.
- Using a revocable or deferred contract. A contract the non-applicant spouse can cash out is an available resource, whatever the agent calls it.
- Ignoring the applicant’s income cap. In income-cap states, an annuity purchased with the applicant’s own assets pays income to the applicant, and gross income over $2,982 a month requires a Miller trust on top.
Frequently Asked Questions
What is a Medicaid compliant annuity?
A single-premium immediate annuity that is irrevocable, non-assignable, pays equal monthly amounts, is priced to return the premium within the annuitant’s life expectancy, and names the state Medicaid agency as remainder beneficiary. When all of those conditions are met, most states treat it as an unavailable resource rather than a countable asset.
How much income can the community spouse keep in 2026?
The monthly maintenance needs allowance ranges from $2,705 (the state minimum, effective July 1 2026 — higher in Alaska and Hawaii) up to $4,066.50, which is the maximum a fair hearing can award when the community spouse has high housing or medical costs. The community spouse’s income also includes any amount diverted from the applicant’s income.
Does the annuity count as an asset for Medicaid?
Not if it complies. The whole point of the structure is that the principal leaves the countable pile — it cannot be surrendered, so there is nothing to count. A revocable annuity or one with a cash surrender value does count, and a non-compliant payout term can cause the full contract value to be counted even though the payments themselves look correct.
Do the annuity payments count as income?
Yes. The payments are income to the community spouse, which is exactly why the structure works: income is limited by the maintenance allowance rules, not by the $2,000 asset limit, and the community spouse’s income is not capped the way an institutionalized applicant’s is. Tax treatment follows the usual non-qualified immediate annuity rule — part return of principal, part taxable interest.
What happens if the community spouse dies before the payments end?
The unpaid balance goes to the remainder beneficiary. If the state was named first, it is reimbursed for Medicaid benefits paid on the applicant’s behalf, up to the amount paid. If a spouse, minor child, or disabled child qualifies for the exception, the state is named second and those beneficiaries are paid first.
Is a Medicaid compliant annuity the same as a Miller trust?
No. A Miller trust — more formally a qualified income trust — is for an applicant whose own gross income exceeds the state’s income cap ($2,982 a month in 2026 under the 300% rule). Income is deposited into the trust and paid out for care. A compliant annuity solves an income shortfall for the community spouse. Some cases need both.
Can I just gift assets to my children instead?
Gifts inside the 60-month look-back create a Medicaid penalty period, and the penalty is calculated by dividing the gifted amount by your state’s average private-pay monthly nursing home cost. In a state with a $10,000 divisor, gifting $150,000 buys 15 months of ineligibility — during which the family pays for care privately. An annuity for a community spouse generally avoids that penalty because the assets are converted to income rather than given away.
Related Resources and Tools
- Medicaid Spend-Down Calculator (2026) — how much of the estate must be spent to reach your state’s asset limit, plus your penalty period from the 60-month look-back.
- Medicaid Estate Recovery Calculator (2026) — what the state can take back from the estate after the Medicaid recipient dies, and which assets are out of reach.
- How Long Will Savings Last Paying for Nursing Home Care? — the self-funding runway for the assets a family is trying to protect.
- Long-Term Care Life Insurance Calculator (2026) — pricing for hybrid life plus LTC coverage, the alternative to annuitizing care assets.
- QLAC Calculator (2026) — the retirement-income version of a longevity annuity, for non-Medicaid planning.
- Medicaid.gov — spousal impoverishment rules (official guidance)
- CMS 2026 SSI and Spousal Impoverishment Standards bulletin (source of the figures above)
- SSA period life table — the actuarial basis for the life-expectancy payout model
- NAIC consumer resources — annuity suitability and policyholder rights
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Most Medicaid annuity cases also expose a separate gap: the healthy spouse’s own coverage. Term life insurance with no cash value is exempt in the Medicaid asset test, which makes it one of the few protection tools a community spouse can buy without disturbing eligibility. Compare prices from 50+ carriers in two minutes, with no medical exam required on many policies.
