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Davis explains how "thousands of middle-class and even affluent retirees" have become eligible for Medicaid by sheltering their wealth in "Medicaid annuities." Medicaid won't pay for nursing home care if people have assets greater than $2,000. Usually that means that people's assets go to pay for nursing home care until they're gone, after which time Medicaid kicks in. But when seniors put their money into an annuity, they can "appear poor enough to get the government to pick up the tab for a nursing home. In reality, they would be far from impoverished. The annuity would pay back their entire nest egg in monthly installments over a few years." The insurance companies who sell Medicaid annuities say they aren't breaking any rules. "But critics such as state legislators see the annuities as a clear abuse and assail the insurance industry for profiting from a product that they estimate has drained $1 billion from Medicaid so far."

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