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She cannot walk or talk. The nursing home says they can take her life insurance. She also has a separate burial policy. We live in Texas. Any advice on where to start or how to proceed from here?

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Don't jump to conclusions before deciding on Medicaid; every state and every situation is different, and the information you need to know is about "estate recovery" (which normally just means what might have gone to you as an inheritance would be taken by Medicaid instead) and "filial responsibility laws" which are the only way there is any legitimate claim to the children's own finances. Life insurance without cash value is usually NOT included in estate recovery.

If you are over income for Medicaid, there is something called a Miller trust that can help, and you would need legal help to set that up properly. For those who are not already in crisis now, consider long term care insurance if you possibly can.
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Thank you guys for all your advice! I never knew this was the way things worked. I have passed this information to my sister who has POA so that we can make the best decision for my mother. Thanks again everyone!!
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I know you have to prepay the funeral. I just checked into all of this. $6000 for cremation in MD and $5000 for the grave site in PA. All done by cremation. And the plot was already paid for!!!!! I am in shock. So I discovered that "The Cremation Society" is in every state. And they will cremate for around $1400. and you can scatter the ashes. I am only doing this because I have no money. The other alternative is donation of the body for Science. They will use it for research or to teach anatomy. They will return the ashes after 4 to 6 weeks. There is no charge. I would only consider this because it might help someone else who has Alzheimer's Disease. I am a middle income person. Too much to get Medicaid. Too little to pay for his funeral. So sad! And I blame it all on Obama! Sorry I said that, but that is how I feel!
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mfbrdb56,
You are right. Term is nothing until the person dies.
Whole life and the hybrid policies with cash value, cannot be taken unless surrendered/closed.
Because, taking cash value while the policy is still accruing, is essentially a loan borrowed from yourself, which must be repaid with interest [not recommended].
The only way a facility or the State can get the cash value, is to demand the policy be liquidated...bad management, to not allow it to accrue more, but, State doesn't generally think like that--it's kinda like all the bits that fall on the floor in a factory--they sweep 'em up and toss 'em, even though there is value in those bits that fall, it's too labor-intensive/not cost effective, to sort them out and use them, so they file those as a loss.
The State and facilities generally just want to liquidate assets as fast as possible, to pay bills as fast as possible. They don't have time/staff to monitor those assets tied up in contracts, etc., and rules and systems don't exist, as far as I know, to allow them to wait to collect a greater amount.
Once insurance policies are liquidated, it's cash, and heirs stand in line behind State and facilities.
Also, remember, someone on these lists, said that if the elder has outstanding credit card balances, and those are not paid off, the outstanding balances are considered "income" for tax purposes, and income tax must be paid on those balances. So, families must decide, which is better--pay the income tax, or pay the loan back? And, how does that affect the Asset issue, with DSHS/Medicaid?
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I actually just had an interview with a Medicaid representative yesterday regarding my mother and possible LTC placement. She has a "whole" life insurance policy with a cash value and a burial policy with the "benefactor" being the funeral home which conducts final services. Whole life policy needs to be liquidated (cash value of around 11k) to be considered for Medicaid. Burial policy can stand. Good luck!
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I meant crystalsaizan.
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crystalsiazan: Contact your state's Medicaid org.
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2nd daughter. I am pretty sure that a NH cannot take the life insurance away from you, but I really think you should check out an elder attorney. We did this and it is worth every penny. To qualify for Medicaid though, you cannot have any insurance that has a cash value - like a whole life policy. That's considered an asset. But you can have a term life policy because the only value in it is upon the person's death if they don't outlive it! Good luck!
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There is no estate.
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Medicaid is for folks without resources. You can't "preserve an estate" and get Medicaid, if that's what you are considering.
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So what I am reading sounds like I SHOULD NOT sign my mom up for Medicaid. Geez. All of the resources out there, and none of them do squat for me! I'll keep playing the lottery and pray for a miracle.
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OldBob is right on this one. We are in Texas. Term life policies are not considered assets but whole life policies are. You'll have to cash them in and purchase a pre-paid funeral policy from a funeral home. Have everything paid for in advance, flowers, limos, casket, cremation, everything. Texas still has a 5 year look back I hope. It's very important to talk to an elder attorney - worth every penny. There are certain kinds of trusts that can protect your home from Mediciad - that is of course, if you even qualify.

Oregon girl's situation sounds a lot like ours. My husband is still okay at home by himself, but I know that won't the case much longer. I have to work full time just to pay our bills. Lots of people would think that there is no way we need financial help, but in today's world that's not the case. We cashed out our IRAs two years ago and sunk the money into a smaller home, because we knew we'd have to do that for Medicaid to cover anything - if they ever will. Ran up credit cards making all the repairs that were necessary. Social Security is not near enough for us to live on, and if my husband ever has to go into a NH and is "lucky" enough to qualify somehow for Medicaid, then his SS will go to the NH. Even if I then work full time it won't be enough to cover the bills. Everyone needs a strong long term care policy beginning when they are young and can afford it to avoid this struggle at a time when life should be less stressful.
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Im confused. My mom has a whole life policy for only $10K which has a cash value at this point of $3000. She is on Medicaid and in a NH. Our state allows $8k in assets before spend down. Im order for anyone to take the cash value from this current policy. .the policy would need to be fully surrendered so i dont see how a nursing home coukd take the CV
At least this is how her policy works
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== Term life policies have low monthly payments but .zero. cash value until the owner dies...THEN the payout can be garnished to pay back State for assistance...as long as the person has not aged-out of the policy. , State might make the policy owner change the beneficiary to State, to get paid as long as the person is mentally able. Or, the facility might demand to have it stopped, so monthly payments can go towards elder care.
== Whole Life policies have higher monthly premiums, and build cash value.
Yes a facility can try to take that asset, but would be cutting its nose to spite itself, since the value would be larger if left to maturity date or death of owner.
If the cash value is low, State might negotiate to be made new beneficiary, then wait to receive the whole payout [Watch 'em! Some facilities WILL pad bills in a thousand ways, to buffer losses, and assure maximum garnishment of assets].
== Other categories: there are policies that are kind of hybrid between Whole and Term, which have a lesser cash-value accrual. The are similarly take-able.
== ALL [as far as I know] life insurance has an age-limit, especially Term...something like age 75, the companies Know the person will die soon, and if they cut off the term policies at 75, they succeed at keeping all the money collected and avoid paying-out.
== Burial insurance policies are usually no better than a savings account. These are usually Term policies, or limited input policies, which pay out on death, only. These usually top out at $10,000 payout.
== Insurance, Assurance companies litter the business; loads of those are money-grabbing, fly-by-night, almost temporary businesses, that collect as much money from [usually Term policies] as possible before selling the biz to other insurance companies; these are bought-and-sold throughout the industry, changing names on the companies each time. Policy money gets lost, so policy owners cannot get paid. IF good records are kept, and one keeps in contact with he company changes, it can be easier to get pay-out. But their game goals are about losing the paper trail to the money.
== States have little-known laws to help retrieve the 'lost' ins. payout money, from a pool account that it is all supposed to be deposited to, in each State; but insurers make that retrieval very hard!.
When someone receives State assistance, be it welfare, food, medicaid, the state can attach all assets, as long as it legally only belongs to that recipient.
IF there are joint owners, or IF a parent has been making payments on policies which designate the spouse and adult children as recipients, that could cloud the picture...especially if the parent signs the policy over to the kids to continue payments on it....which needs done more than 5years ahead of becoming a DSHS recipient.
A house owned by parents, which they and any of their disabled children also live in, should be exempt from seizure. Most states are joint-property--the surviving spouse still needs a home. So do disabled children--they should be covered under laws made to protect the spouse and/or the disabled children from being made homeless by the State, thus becoming a greater State burden. A law like that exists in WA; seems most States might also.
BUT...if the State really can't wait, they can push for asset liquidation, even if it causes all parties to take huge losses; yep, bad management.
Check your State laws.
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My mother is in a nursing home in NJ, and I had to cash in a life insurance policy, since it had a cash value. It was a $1,000 policy taken out in 1946 and in 2012, it had a cash value of $5,000. Had to cash it in and turn over the $5,000 to Medicaid.
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Someone mentioned a while back that if the policy was an employer policy, it can't be touched. If the person bought his own policy they can take it.
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it is my understanding, per an elder law lawyer, that Medicaid can only look back on checks above $500 here in MD
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Medicaid laws have both state specific as well as national guidelines. No one can legally 'take this' (policy) without legal authorization. That said, there are grounds by which 'Medicaid' eligibility may be affected. For instance, 'Medicaid' may consider any 'cash value' inside this policy to be an asset that must be exhausted before eligibility may begin/continue. An Elder Law attorney or other Medicaid specialist may be advisable. Good Luck! P.S. Remember, a paid up death benefit policy/burial policy is typically a provisional asset allowed under most 'Medicaid' laws. And be careful with ownership changes as there are many ramifications from such!
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So if I have a whole life insurance policy that has a pay put of 50K but it only has a cash value worth 10K, if I am in a nursing home on Medicaide they make the family cash it in for the 10K? That sort of defeats the purpose of life insurance doesn't it? Pretty good deal for the insurance companies though. They don't have to pay out the full amount on death.

I think I need to tell my husband this. We each have whole life insurance policies so there will be something for the other, if one of us passes away. We got them because in 15 years they are paid in full but good for life. That doesn't mean anything though in light of this information.
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They can't just take the policy from your mother (if that's what you are afraid of), but if all her funds for care have been depleted -- Medicaid requires that any whole life policies being paid on a monthly basis will have to be liquidated at cash value and given to the Nursing Home to pay for her ongoing nursing home expenses while she is living. Unfortunately they are considered assets to use for her nursing home expenses, but they can't just take the actual policy from her. If you have a family member who has Power of Attorney for your mom, they can call the life insurance company and ask what the cash value is and make arrangements to send the POA the check (or cashiers check) so they can give the Nursing Home the Money. The Insurance company will require you send them a copy of the POA before they will talk to the person though.
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If there is an outstanding balance at the nursing center, the business can file with the county court a seizure of assets, this would take the estate of the senior into probate unless the family and the center would be able to reach a settlement. If the senior signed paperwork transfering all financial matters to the nursing center, there aren't alot of options left.
Number one rule: insist that the center provide the last six months of billing to prove there is a debt owed. If there is, ask them why you were never informed of this debt. Always get a paper trail.
Number two rule: as soon as a person is admitted to a nursing facility have a financial & medical power of attorney signed & filed with the county recorder. This will ensure that you will always know what's going on. It is also the paper trail to file suit if shenanigans occured and you were not informed.
Number 3: Get the ombudsman. If the life insurance policies are being seized on more than one resident, a class action suit can be put in motion. Two voices carry more weight than one.

I am the Healthcare Administrator & Director of Nursing at a Long Term Care Facility. Those are the three rules I really impress upon the family members of new intakes to follow.
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I would like to say no. I currently know someone who is in a nursing home, and she has long since had a life insurance policy with her prearrangements. If you're on Medicaid, you can list the funeral home as the policy owner. That way, it's better protected against liquidation, because someone else owns it on your behalf. This also protects your prearrangements at the same time. This is how I have mine set up, and anyone on Medicaid can do this.
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Would suggest that you speak to someone outside of the government who specializes in Medicaid qualifying because they might know how to protect her assets without the 5 year look back period. I'm not saying that I condone this,, but it happens all the time. In other words, they would make her qualify for Medicaid and protect all of her assets for her estate. Could be an estate planning attorney, but they have to know their way around Medicaid
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The nursing home is not the gov't. It is a separate entity that has accepted Medicaid reimbursement for their services. If your mom is already on Medicaid, the nursing home is being paid by Medicaid and cannot take your mom's life insurance policy for payment. Their payment is now coming from MC. Now - whether, or not, MERP can take the funds is a whole other question. But - it sounds as though someone at the NH is making idle threats. The Social Services director should be told about this.
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Oregongirl, there is no federal estate tax on 60K. It's only if there is more than 2 or 3 million, I think. As far as your state, I don't know, but neither you nor I will have to worry about the federal!
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I have nothing worthwhile to contribute to the question, but it just makes sick how the government & nursing homes take everything a person has in order to take care of them. It sickens me because the government doesn't go after those who are collecting disability benefits & working for cash, or people on Medicaid that get paid in cash so they qualify for government benefits, anchor babies of illegal immigrants, etc. People that worked their entire lives, paid into the system of taxes, Medicare & social security get everything taken from them & can't even leave the assets they worked so hard for to their children/spouse/family. I understand that places don't operate for free & they have expenses & overhead, but the level of care in a nursing home is minimal at best & the majority of them are for-profit facilities with the administrator(s), CEO & owners pocketing massive salaries & bonuses.

And, yes---a nursing home will take all of the assets because they are the ones that will put a person on Medicaid when there's no money left to pay the nursing home. I often wonder if the "American dream" is even worth it anymore. Sometimes I think you're better off having nothing---renting someplace to live, spending all your money like a drunken sailor & not saving a penny. That way, you've enjoyed the money you've earned instead of letting the government & nursing home have all of it. I realize that no one works for free, and the facility must be able to pay salaries to its staff----but to charge people exorbitant prices for a bed in a nursing home is ridiculous. For an average of $500, what people get is not worth it. You can stay in a nice hotel, order room service every meal & have a private aide for that kind of money.

Just my opinion.
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Dont they have to leave something for the living spouse? Like the house, cars, etc. that are in both our names? Half the investments are mine.
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It is disgusting how the tax people come after you even before you have completed your mourning process. Does anyone know the RATE the IRS and most states are? Example if I inherit 60,000. What will the taxes be on that amount?
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Wow.....I had no idea that a nursing home could take any personal monies, Medicaid or not. I guess the govt. can take all the money they want no matter what the situation is.....
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Please remember that when you are on Medicaid your Government is financing the care you could not afford on your own. Sorry they do want to recoup their monies so that others may be financed in the future. You do not get a free lunch just because you got old or sick! Granted, we need a better system, but that would need financing too. Higher taxes maybe?
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