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Will money placed in an annuity be treated as income when withdrawn?

VA says they may reduce my mothers benefits based upon money drawn out of an annuity, used to pay
expenses in the assisted living facility. Should she be penalized like this, for monies, she had set aside
for her living expense?
Status: Open    Nov 17, 2014 - 04:09 PM

VA Benefits

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Expert Answers

Nov 19, 2014 - 01:30 PM

The VA financial assessment considers funds received from an annuity as unearned income that can be used as a resource to pay for the costs of care. The same would be true if your mother was applying for Medicaid assistance. The best way to look at it is to consider if the annuity had not been purchased. The cash in her bank account would be considered as part of her net worth and could have put her over the eligibility threshold for benefits. Shifting the cash to an income stream does not protect it from consideration as funds available for care expenses.


Mar 31, 2015 - 11:19 AM

If the annuity is non-qualifed annuity, essentially a CD with bigger penalty periods and interest, then only the in interest income earned is counted as income.


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