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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

Content is the opinion of the author and does not represent the position of any other person or entity. Information is from sources believed to be reliable but cannot be guaranteed.

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Medicare vs medicaid planning

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: I am interested in planning for Medicare coverage, can you suggest some good Medicare eligible annuities and give some information about their use in general?

A: Some clarification of terms is needed first. The term "Medicare planning" generally refers to a type of tax planning that is intended to minimize the taxable portion of Medicare benefits for older workers that are subject to federal income tax. This only applies to Medicare beneficiaries who still have significant earned income. Since eligibility for Medicare and the amount of benefits are already fixed by law, there is little other planning that can be done in this area. Medicare planning has nothing to do with annuities and there are no "Medicare eligible annuities". The term "Medicaid planning", on the other hand, has traditionally used a product called Medicaid-qualified annuity to protect some of the owners' assets while still qualifying for this federal health coverage intended for the indigent. This only applies to individuals facing potentially large health care costs that would otherwise wipe out all of their financial resources. The goal is to protect at least a small portion of assets for the owner or the family. To prevent abuse in this area, the federal government now prevents professional advisers (including financial writers) from showing clients who would not otherwise qualify for Medicaid on how to "beat the system". So it is not possible to publish a specific blanket recommendation in this area. The best approach is to take a big picture view of your retirement planning with a one-on-one exploratory session through OnlineAdviser service. If either type of strategy is appropriate in your specific situation, that will become apparent in your discussion with the adviser.


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