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?
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.
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!
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!
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?
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!
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!!
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.
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?
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.