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How to Use an Annuity to Pay for In-Home Care

8 Creative Ways to Pay for In-Home Care: Page 6

By , Caring.com senior editor
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Annuities are designed to help seniors turn retirement savings or a pension into a steady, guaranteed income stream that pays out until death or for a set number of years. The money can be used to pay for in-home care or, eventually, for assisted living if necessary. An annuity is like a cross between an investment fund and an insurance policy; the money is invested at a fixed or variable interest rate, and then, after an agreed-upon maturation date, you can begin making withdrawals.

Annuities have become controversial because of unscrupulous representatives who take advantage of vulnerable seniors. So help your loved one find a reputable financial institution and representative to consult regarding an annuity purchase.

Another benefit of an annuity is that the sum invested isn't considered an asset when applying for Medicaid. The government counts the income paid out from the annuity, but not the amount originally invested.