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What If a Medicaid Recipient Dies Before an Immediate Annuity's Term Is Up?
Suppose a person has an immediate annuity with 10-year term certain. If after 5 years, the annuitant dies and has been in a nursing home covered by Medicaid, will the second beneficiary be able to receive the next 5 years of annuity payments or do they become the property of the state?
That depends on how the state is applying federal law. Under the federal Medicaid law, the state is supposed to be reimbursed out of the future annuity payments for whatever it had paid out for the now-deceased nursing home resident's care. Only after such repayment has been made may future annuity payments, if any, go back to the family. However, not all states are applying this provision, so you will need to consult with a local elder law attorney to be certain.