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My dad and I have placed my 82 YO grandmother in a nursing home. She had Medicare and Medicaid. Her life insurance policy has a cash value of a little over $5000. In order for her Medicaid to kick in and help pay for her care, my dad (the beneficiary) had to sign the policy over to a funeral home and make her final arrangements. We sent all the paperwork the insurance company asked for in to them time and time again only to be given the answer that her POA does not have the authority to sign her policy over to anyone else. If he were trying to cash it in I could understand. He is simply trying to get it out of her name so Medicaid will kick in pay for her care. The funeral home called and spoke with the insurance company. They told the funeral home he could do something, but of course they wouldn't specify what. We have an appointment with the attorney that wrote our POA in the next week. But until then, has anyone ran into this issue? If so, any advice? And maybe if anyone else is going through this situation, it may be a good thing for you to ask your attorney if there is a statute that allows you to make changes to life insurance policies out there. My attorney says there is not and he has been practicing for 40+ years.

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Why did your father not call the insurance company himself? It is possible that the insurer would not enlighten the funeral home because the policy in no way belongs to the funeral home, and the insurer is therefore constrained by confidentiality.

The whole idea of power of attorney is that the POA acts for and on behalf of the person he represents, as though he were the person; the POA gives him identical authority with that person. So I can't guess what their problem is but I'd call them and find out.
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Cgjivey Sep 2019
We both have called the insurance company. They told us that we could not change the beneficiary. The funeral home called to see if they could get anymore information than we had gotten. All they told them was that we could do 'something' but did not specify what that was.
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Gladimhere is exactly right. Your father had no legal standing to assign the policy benefits to the funeral home. The named beneficiary on the policy would get any payout, and only the beneficiary. The funeral home is at fault here also, and they should have known that they could not be assigned beneficiary status. I suggest you speak to them and have this entire transaction reversed. You may need a very good attorney also, because most funeral home will NOT refund prepaid arrangement. Check with your state laws also to see if this was even a legal transaction.
This same situation exists with bank accounts. Beneficiaries/POD named on accounts override any will or POA.
Please keep us updated. All of us can understand a decision being made, because understanding and navigating the the Medicaid maze is a nightmare, leading to a problem. There are a lot of very smart folks on this board that will try to help...but remember that any legal actions you take must be discussed with an attorney. Best wishes.
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Cgjivey Sep 2019
We were told by DSS that we had to sign it over to a funeral home and get it out of her name. So I guess we need to get them to help is figure out what to do. He is contemplating just dropping the policy which I think he shouldn't do because she has paid more in than even the policy is worth. They should not be able to just walk away with all of the money she has paid and now at the end of her life our family have to foot the bill when she has paid for this all these years. We are faced with either letting her policy go so DSS will pay for her NH care or pay for her funeral.
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Interesting. I can see where signing over the policy for final expenses may cause issues. A POA cannot change wills and I imagine life insurance beneficiary would be treated similarly. And the cash value of the policy being given to the funeral home could be considered gifting. As I think about this more I wonder if it some sort of scam. For instance, the funeral home becomes the owner of a $25,000.00 policy, that has cash value of $5,000.00. Final expenses are $10,000.00 for a funeral. Then what happens to the remaining $15,000.00?

I am left wondering about the legality of this. I can see that the only option may be to cash the policy in, then spend down the proceeds by paying for final expenses.
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worriedinCali Sep 2019
The cash value of the policy wouldn’t be considered gifting under Medicaid rules. It would be considered valid as part of the spend down because preparing for a funeral is an allowable expense.
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I was Moms POA and beneficiary. My local Funeral home would not except insurance policies. I cashed Moms two in. Then the funeral director set up a trust with the money. Any money left over after funeral costs goes back to Medicaid.

Did Medicaid tell you to handle the policy this way? If so, call them and tell them insurance company is giving Dad a hard time. I would get it in writing, like an email, why the insurance company won't allow this.
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Cgjivey Sep 2019
We have kept all documents and told DSS about it. All they say is we will have to pay out of pocket until we get it switched over
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My mom lost the bill to pay her life insurance company one month. A very small policy she had since the 60’s. The insurance company would NOT even listen to me asking them to send HER another bill, at HER address and I am her POA! I knew the amount, but needed the Address to send it to. Made me mad as heck...they were hoping to be able to cancel the policy for nonpayment.
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I think it may need to be paid directly to the funeral home by the POA. I think having the funeral home handle it is excellent and that you should arrange a call where you can actually BE THERE with them to see how to do this. A "lawyer letter" may also be appropriate, because in some states there are actually cash penalties for refusing to act in a lawful manner in these instances.
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The father IS the beneficiary.

Who is the POA?
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Cgjivey Sep 2019
Yes he is the beneficiary and we are both financial and healthcare POA
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If the policy has a cash value, then see if he can cash in the policy and then prepay for some/all of the funeral expenses. Doing this would NOT be considered gifting, It would be considered a spend down on an allowable expense (funeral). Your dad is the beneficiary of the policy and from the sounds of it, the POA. Your grandmother is still mentally competent right? She can cash it in then. Medicaid typically requires the policy to be cashed in, not signed over/beneficiaries changed.
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Cgjivey Sep 2019
No she is not competent anymore. She is in her final stages and no longer communicates very well. DSS told him he had to sign the policy over to the funeral home and make her final arrangements. He has to plan the funeral and take a copy of it to DSS so Medicaid will start paying for the NH bill. I am going to have the lawyer ask if we can cash it in and then he can put it towards the funeral and just finish paying the rest. I wonder if the fact that we are in NC and the insurance co is in NY makes a difference?
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When an insurance policy is put in place the beneficiary can be made irrevocable. Nothing short of a court order can change it.

What you are asking the insurance policy to do it pay out the cash value. The insurance company has no control over the funds once your Dad cashes them out. If the policy is irrevocable, Dad cannot change the beneficiary.

If the policy beneficiary is revocable, then Dad needs to check if the Powers within his POA allow him to change the beneficiary. Depending on how the POA was written, it may or may not be allowed. I know I cannot change any insurance that my mother has. I can renew her car, or house insurance, but I cannot touch her life insurance.
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