An annuity is Medicaid compliant if it follows strict rules set by federal law. These rules include:

• It must be irrevocable (can’t be changed or canceled)
• It must pay out within the owner’s life expectancy
• It must make equal monthly payments (no lump sums or balloon payments)
• It must name the state Medicaid agency as a beneficiary (after a spouse or child if applicable)

If the annuity doesn’t meet these rules, it could be seen as a gift, and hurt the client’s Medicaid eligibility.