You may choose to enter into an annuity contract with an insurance company to help pay for long-term care services. In exchange for a single payment or a series of payments, the insurance company will send you an annuity, which is a series of regular payments over a specified and defined period of time. There are two types of annuities:

• Immediate annuity
• Deferred long-term care annuity

Immediate Annuity

If you have an immediate long-term care annuity, the insurance company will send you a specified monthly income in return for a single premium payment.

This option is available regardless of your current health status. If you do not qualify for long-term care insurance because of age or poor health or if you are already receiving long-term care, you can still purchase an annuity.

The insurance company converts your single premium payment into a guaranteed monthly income stream for a specified period of time or for the rest of your life. How much you receive in income each month depends on the amount of your initial premium, your age, and gender. Since women tend to live longer than men, women generally receive a smaller monthly payment over a longer period of time than do men of the same age.

Key things to consider before purchasing an annuity:

• The annuity amount you receive may not be enough to pay for your long-term care expenses.
• Inflation may reduce the value of the monthly income you receive from the annuity.
• The effect that annuities can have on your taxes is complicated. Consult your tax professional before purchasing one.

Deferred Long-term Care Annuity

These plans are available to people up to age 85. Similar to other annuities, in exchange for a single premium payment, you receive a stream of monthly income for a specified period of time.

The annuity creates two funds: one for long-term care expenses and another separate fund that you can use however you desire.

You can access the long-term care fund immediately, but you must wait until a specified day in the future to access the separate cash portion. The rules of the annuity define how much you can access on a monthly basis from the long-term care fund and how much you can access on an annual basis from the cash fund. To qualify for a deferred long-term care annuity, you must satisfy some health criteria.

Key things to consider before purchasing a deferred long-term care annuity:

• If you do not use the long-term care fund, you can pass it on to your heirs
• The annuity may not be enough to pay for your long-term care expenses
• The long-term care portion of the annuity may satisfy the requirements for a tax-qualified long-term care policy.
• The effect that annuities can have on your taxes is complicated. Consult your tax professional before purchasing one
• An annuity can affect your eligibility for Medicaid, and whether Medicaid will pay for your long-term care services.  See the section on "Annuities" in the "Medicaid Eligibility" section for more information.