When my Dad passes I know I have to sell his home but what about his life insurance?

Check with ins co's to see if they can convert cash value into a prepaid funeral policy. I'm not M.A. but I believe they do allow this if it is for funeral needs (they have a ceiling on how much spent in funeral prepays).

If the policy is term life with no cash value, it is exempt

Confused - about "needing" to sell the house. Yes the states are required to attempt to do a recovery of the costs Medicaid paid for dad. This is MERP. But the states have all kinds of exemptions, exclusions and hardships that heirs can file so that MERP doesn't happen or reduces MERP claim / lein by your own costs. Look to see if you or other heirs to dads estate (which would be the house or proceeds from the sale of the house) qualify for any of them.

I have been reading a bit on life insurance policies, since we have gotten a few questions. There is a bit in the link below that was written on the board. I cannot give a straightforward answer, since the amount allowable for insurance policies can differ from state to state. I have run into different ways to handle them. The owner can sell them for their surrender value. Someone, perhaps an heir, can purchase the policies and become the new owner. Or the beneficiary can be changed to be something that is allowed by Medicaid, e.g. reimbursement of Medicaid or a funeral home. I have learned that what can be done with insurance policies is not as cut and dry as I once thought. Perhaps the best thing to do is to check the surrender value and note if any more premiums need to be paid and decide what to do from there.

https://www.agingcare.com/articles/life-insurance-medicaid-eligibility-150880.htm

He does own the insurance policies. The one policy which I did not know was $5,000.00 & the other 2 are around $400 each. I am the beneficiary on the policy. That why I was wondering if Medicaid would get that money too.

Confused, it depends on who owned your father's life insurance account. Was your father the owner? If so, it must have been a small policy or the state would have required him to sell it during spend down. Who is the beneficiary of the policy?

Anything remaining in your father's estate will be subject to Medicaid recovery. This, of course, does not include personal items in the home that do not have substantial value.