Medicaid and life insurance proceeds. Any advice?

Just to be clear I was not trying to commit Fraud. I was only going to do what could be done legally. That is why I posted the question. Part of my concern is that all her money gets spent on things that would be covered by Medicaid (Which she is not on yet) and then something that is not covered happens and there is no money to handle it and she suffers because of it. My goal here is that she does not die without resources.

Suggesting fraud or unethical behavior is NEVER a good idea. Spend it on mom and let the chips fall where they may. Your conscience will love you!!

The insurance company will send out paperwork that would have mom's name, address & SS # show up whether she got the funds or she declined and they paid to others. It will surface as an asset eventually. The only way that it doesn't is if you continue to hold the policy and do not cash it in until a period of time after mom dies. You need to carefully review the policy to see what happens if the policy is not redeemed within a period of time after the policy holders death.

17K isn't enough - imho - to be worth the wrath of Khan that a Medicaid transfer penalty could cause. Cash it in and spend it towards mom's care. My mom's dental work was way more than this alone - dental isn't covered by Medicaid so if she needs stuff done, this is a great way to do a spend-down. If your mom doesn't have a prepaid funeral & burial, that could be 9K right there if she wants a traditional one. Good luck.

The insurance proceeds are an asset now even if she hasn't collected it. Go ahead and collect it. You could contact an elder care attorney before that's done if you want to see if there's some way to preserve it instead of using it for her immediate care.

She should claim it and not attempt to hide it. She should keep it and spend it only on her own personal care, not give it away. That's why they bought it years ago, to take care of HER.

You can look up all of the Administrative Rules on your State's website as it is public information. No matter how you slice it, purposefully trying to keep/hide/redistribute money to avoid Medicaid from either getting it or counting it is fraudulent. Your State should have an estate recovery unit for Medicaid. You will get your best and most accurate answers to your questions by contacting them. You can ask them questions anonymously. The key is to carefully read the policy for its specific language. If the policy does not have a cash value, then it is not typically a countable resource to determine eligibility.