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Yes but if the child needs to go on Medicaid in the future, then all the $$ they got from the policy as beneficiary of the insurance will have to be spent-down.

Really you want to avoid that at all costs.

What I'd suggest you do is look to have an attorney structure a special needs trust that the $$ goes into. The trust would need to be set up and be the beneficiary of the insurance policy before mom'dad dies. Special needs trust can be pretty sticky so you really want legal that is experienced at this in your state. The trust can be done in quite a # of ways depending on what the needs are anticipated. My cousin was a 1950's polio child - & my aunt & uncle set one up ages ago for him. I & his older brother are directors on the trust, which is there just in case he cannot self-direct where the $ goes. He has physical limitations not any cognitive issues so he decides what to spend on and we just meet once a year as per the trust directive. He is on Medicaid too and his trust is not an asset for him. What the trust does is pay for stuff that allows him to function at a higher level than what Medicaid will pay for. Like his car was done all retrofitted for his disability; he had custom shoes & clothing made when he was still working which were paid for out of trust funds. He has a speciality caregiver out a couple of times a week which the trust pays for in addition to what Medicaid does. But a trust is not a DIY project, you need good legal to provide you with options and set it up so it's compliant if Medicaid might be needed. Good luck.
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I should have said if the child still needs to qualify for Medicaid.
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Yes. Someone on Medicaid would have to spend down a policy they personally owned to be eligible, but they can be a beneficiary on someone else's policy. However, any money received will also have to go to spend down or recovery if the child is still on Medicaid.
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