Can the nursing home take Dad's insurance policy?

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My dad needs to go into nursing home in NC he gets about 3,500 from his pension a month , he also has a 15,000 life insurance policy from AARP can the nh take his indurance policy 15,000 life insurance AARP

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Kallen's question shows us the many different categories of assets that are listed in every Medicaid application. In my state (Massachusetts) the Medicaid agency grants a free pass to 1 life insurance policy if it has a Cash Surrender Value under $1,500. You can Google the regulations for Kallen's state (North Carolina) and find that her state may be more generous with cash surrender value.

If the life insurance policy doesn't have a cash surrender value ((some policies that were provided and paid up by employers before the person retired don't have C S V)) then it is not even counted against you. Term life insurance may not have a cash surrender value, but then how will you keep paying premiums to keep the policy in force if your income is taken to cover the nursing home patient paid amount?

In my state (Massachusetts) there are several ways the cash surrender value can be reduced to bring the policy into compliance.

Also, if there is a spouse living at home, a life insurance policy could be included in the asset allowance for the spouse ((called the Community Spouse Resource Allowance in my state, Community Spouse Resource Protection in some other states)).

There's so much to consider when applying, it is usually a positive cost-benefit decision to hire help with the application and asset planning.
Nursing homes costs about $70,000 to $80,000 a year to care for a single patient every year (not a private room either). Despite the high amount, many receive very poor care, prone to infection from the other inmates, and abuse. My understanding of medicaid is that they seize the entire family estate (except the home, which they can get after the person dies)--in my State you have to "spend down" for the cost of his care to some ridiculously low amount of money -- you are only allowed to spend it on the cost of his care, or invest in home repairs/rennovations, funeral costs, and or a buy a new car (which most likely he won't be able to drive). They have a five year look back law, so you can't transfer the estate monies to your account without Medicaid penalizing (they will not allow the person into a nursing home until that amount is used up equivalent to being in a nursing home, something like that--it's horribly complicated). Medicare will NOT pay for long term care -- the person has to be in the hospital for 3 days, and Medicare will only pay for 100 days in a nursing home for rehab. Anyway, once the money is "spent down" (and PLEASE see an eldercare attorney about this because it has to be done right), he will be eligible for Medicaid. The nursing home will seize his entire income for cost of his care. This does not relieve the stress for caregivers, however. You MUST visit very frequently - even daily - otherwise your loved one will be more prone to abuse and neglect. $3,500 a month you should be able to very nice assisted living facility. If he's ABLE, I would check into assisted living and try to stay off of Medicaid like the plague.
Please contact an eldercare attorney. Medicaid has no interest in impoverished the spouse who still lives in the community. You are able to keep something around 100,000 as the community spouse. Find a lawyer who will do a free half hour consult and see if you find his advice worthwhile to invest in
If it is term life with no cash value there is no reason to take it from him. It is not the NH that takes it, it would be NC Medicaid rules. Read the policy and see what type it is.
Check w/ NC SHIP office. www.seniorsresourceguide.com/directories/National/SHIP/
If his pension and social security cover the cost of care, his life insurance will be payable as written. If the $3500/mo is all he has and that is not enough for the cost of care and Medicaid pays even a fraction of his costs, there could be a lien at death to recover that cost to the state. Could he stay in a board and care? The lower cost could maybe be covered by his pension.
THERE IS A SOLUTION: that eliminates the situation of Medicaid Penalty, Medicaid Denial, or Medicaid Recovery due to having a life insurance policy.

This is very tied to the ongoing discussion here.

ANY life insurance policy providing it has not lapsed, (even term, group, whole, or universal), can be converted into payments to the Assisted Living, or Nursing Home, (Care provider), and is considered A VALID MEDICAID Spend down! (If the FACE Value is over $50,000 it can be considered)!

Avoid letting the policy lapse because the family or the owner cannot afford to pay for the policy, and care at the same time. Don't waste that 'investment' because you think Medicaid will take it after death. If you do the Insurance company is the only benefiting party

Also policies with a cash value can be converted to a FUNERAL TRUST, (another MEDICAID APPROVED spend down), even towards family members!

The trust proceeds are then portable, and are not designated to any particular funeral home, (portable to any location)!, not committed or tied to that funeral home. and the funeral home IS NOT the beneficiiary

A person facing immediate Nursing home needs, (or the POA, power of attorney) yet having (for example) $80,000 can obtain $10,000 (each) , a Funeral trust for self & spouse, and children.

Therefore in contrast to paying it all ($80,000), to the nursing home, can immediately apply for Medicaid.

It may be advisable to search for a Nursing home that accepts both private pay AND Medicaid to preserve 'choice options', enter the nursing home as private pay for one or two months, and convert to Medicaid.
In the above example we reserved perhaps $10,000 to $20, for Nursing home payments and $60,000 was devoted to 6 individual Funeral trusts, NOT obtained through the funeral home.

Research, research, research, and then read the Medicaid rules in your state. All states have the ability to make alterations. For example, in CA, they have Medi-Cal and its not exactly the same as Medi-Caid! Each county also has different approaches. But its extremely important to understand the rules that you are being subjected to because you have to follow them for spend-down, asset protection, spousal protection, and last but most importantly, the protection of your loved one.
My husband is in the same situation. I took out life insurance on him about 30 years ago and am still paying on that policy. It is now worth about $120,000 if he dies. If he has to go into a home, they will take everything, including the policy worth only about $40,000 if you cash it in. I don't want to do this because I own my own home. They can't take away your home or your car. They can take a second home or a second car. If I spend down to $2000, the allotted amount to have in the bank, I won't even be able to pay my taxes on the house. I just don't understand it all. I will have to contact a lawyer if it comes to that. And I don't know how I will pay him! I live in MD. God help us. We do all the caregiving and we don't have enough to live on. It just stinks.
wamnanealz I am also in MD and spend sleepless nights worrying about if my husband has to end up in a NH with his dementia. I am also concerned about how I would possibly pay the taxes on my house and other expenses as I would only have enough money from SS and his pension to just get by on.
Kallen: Are you absolutely sure that your Dad has to go into nursing home? I'm sure that you've checked out all other options, including the three-shift nursing home care. ( less expensive than a N H)..
If all other options have closed, and you have no choice but to send him into a N H, then that's it. They will send you a bill. How you pay it is up to you.
Medicaid, the state-supported program, can offer assistance, but their rules are horrific. These rules have been discussed here many times by different caregivers in different states. You may want to read Gabriel Heiser's book on Medicaid before you do anything.

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