Life Insurance Policies

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What should I do if my mom refuses to sign papers to have her assets in life insurance spent down in order to qualify for Medicaid?

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A life insurance policy is legally recognized as an asset of the policy owner and it counts against them when qualifying for Medicaid. If a policy has anything more than a minimal amount of cash value (usually in the range of $2,000) it must be liquidated and that money spent towards cost of care before the owner will qualify for Medicaid. All Medicaid applications specifically ask if the applicant owns life insurance and full policy details. Failure to disclose and comply is fraud.
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So my question is, my mom has COPD now and is a recovering alcoholic and smoker. However, she has rebounded now and it worries me that she has no life insurance at all. I have sat with her on numerous occasions to try and discuss this topic and it only upsets her. She says she will never sign a life insurance policy cause she is going to be around along time. Just fustrated and concerned what to do. She is 68 and just getting older..what can i do? Please help..Kim
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D2...
Confusion may lie in the use in terms. There is a difference between a "Pre-paid Funeral Account" and an "Irrevocable Funeral Trust" both of which may be funded with life insurance.

A pre-paid funeral account may be revocable or irrevocable. An irrevocable trust is, as its name suggests irrevocable.

Rules are state dependent. In Florida, an irrevocable funeral trust or an irrevocable pre-paid account is not countable. A revocable account is countable if proceeds or life insurance cash value is over $2,500. The account must be deemed a "burial account".

The statement "...is only irrevocable for a short period of time" makes no sense to me in this context. You might try speaking to the funeral home directly to confirm what was said.
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I am sorry that some states are going to put lien on insurance polices. In my mother case she lived in New York. Her house was only in her name. I had to sell the house and in a copy of years the insurance and laws were going to change in favor of a lien by the nursing home. All the polices had my name on them and I was able to use them for her biils and funeral cost. I sold her house in 2005 and they had inform me the laws were to change.
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Let's assume the Medicaid recipient owns a life insurance policy. If the life insurance policy proceeds are payable to the estate of the deceased owner (unusual), then indeed the state would be entitled to some or all of that payment. However, if the proceeds are payable to someone else (such as the son or daughter of the deceased owner), then such payment is "non-probate" and under the laws of most states would be protected from a claim from the state for reimbursement for the deceased owner's Medicaid expenses.
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Mr. Heiser, I've been reading the posts regading cash value insurance policies closely. Upon the death of the insured family member, why would Medicaid not be entitled to the beneficiary amount? I understand the cash value part entering into whether the person is qualified for Medicaid on the front end. Also, I tried to open a pre-paid funeral account directly with the funeral home for my father but was told it is only irrevocable for a short period of time. How does one set up an irrevocable account?
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Norene, yes you have been given a lot of good advice. get yourself a edler attorney and also call elder care. Make sure you have all your paper work in order. like you were told everry state does have there only little rules and laws they follow. If you have insuance polices that are paid in full and have the power of attorney, no matter what state you are in and you are the only one listed. call the insurance company up explain mom loved one is ill and you need to cash them in. Setting up a pre paid funeral plan is a great thing to have. Becasue if someting happens you have one less thing to worry about. Not every one has the cash up frount to pay for a furneral/ and the price is locked in. It helped me out. I used moms insurance money to pay for her pre paid funeral expenses years beofre her Alzheimers/Dementia got bad. That wass also before I had to sell the house and a lein was placed by the nursing home for a whole year even though they were paid in full . Also the lawyers and real estate got most of her money/ that was in New York. Florida was different. hope every thing works out for you. You may seem you are going in circles but like everyone on this net work will tell you they have been down the same road one way or another. May you have a blessed holiday season. and that goes for all the cargivers out there thank you so much for your help and love, care, good advice and hugs. patrica61
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Norene,
You have- actually we all have been givin great advice and guidanece. The next logical step is to take everything that you learned and to contact a local elder attorney that will be able to specifically guide you in your own personal situation. Each state is different and as caregivers we are too. Take it to the next level- pick up the phone or go onto the internet and find a local elder attorney. I only wish that I had this infromation before- but you have it now.
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Ok, Mr. Heiser, I'm definitely in that latter category. I still don't understand where the cut-off is.
Norene
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