Most agents and advisors working with married couples in Medicaid planning situations default to purchasing the Medicaid Compliant Annuity in the community spouse’s name. And in many cases, that’s the right call. The community spouse owns the contract, receives the payments, and the excess countable assets are converted into income that supports their lifestyle in the community while the institutionalized spouse qualifies for Medicaid.
But this isn’t the only approach. In some cases, purchasing the MCA in the institutionalized spouse’s name is the better strategy. Understanding when and why that’s the case is the kind of technical knowledge that separates advisors who dabble in Medicaid planning from those who do it well.
Read More: Best Practices for Transferring Assets to a Medicaid Compliant Annuity
The MMNA Factor and Income for the CS
One of the key scenarios behind the institutionalized spouse (IS) MCA strategy involves the Minimum Monthly Maintenance Needs Allowance (MMNA). Based on Medicaid’s spousal impoverishment standards, the community spouse (CS) is entitled to a minimum income amount, and if their own income falls below that floor, they can receive a portion of the IS’s income to close the gap. As of July 2026, that floor ranges from $2,705 to $4,066.50 per month in most states.
In cases where the CS has a low enough monthly income to qualify for a MMNA shift, this strategy is particularly effective. Because the payments are attributed to the IS as their income, the income shift rules apply. The CS can still receive an income allowance from the IS up to the MMNA, layering the annuity income strategy with the spousal impoverishment protections built into the Medicaid program.
The IS MCA strategy is most appropriate when:
- The community spouse’s monthly income is below the MMNA.
- The community spouse is in good health and expected to outlive the institutionalized spouse.
The Beneficiary Advantage: Naming the CS Ahead of the State
When the MCA is purchased in the CS’s name, the state Medicaid agency must almost always be named as the primary remainder beneficiary, up to the amount of Medicaid benefits paid on behalf of the IS. However, when the MCA is purchased in the IS’s name, the beneficiary rules are more favorable. In these cases, the CS can be named as the primary beneficiary, with the state Medicaid agency in the contingent position. That distinction has significant practical consequences.
If the IS predeceases the annuity term while the CS is still living, the CS as primary beneficiary is entitled to the remaining contract value. They can continue receiving the scheduled payments for the remainder of the term, or in many cases elect to receive the remaining balance as a lump sum. In other words, couples who use the IS MCA strategy retain more flexibility around the remaining contract value if the IS dies earlier than expected.
The one caveat: this structure depends on the CS surviving the IS. If the CS passes away first, the state Medicaid agency moves into the primary beneficiary position, and the estate recovery protection is lost. That’s why the IS MCA strategy is best reserved for cases where the community spouse is in good health and reasonably expected to outlive the IS.
Read More: What Is the “Name on the Check Rule” MCA Strategy?
Putting It Together
The IS MCA is not a universal substitute for the community spouse MCA. Each strategy has its place, and the right choice depends on the income picture, the asset composition, and the health and longevity profile of both spouses. But in cases where the community spouse’s income is below the MMNA, the IS MCA strategy deserves serious consideration.
If you have a married client where the IS MCA strategy might apply, reach out to our team. We’ll help you evaluate the facts and structure the plan effectively.