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The life policy is $7,500. The cash value is $4,000 and the dividends that compounded are $2,700. Can we withdraw the dividends before he signs it over to the funeral home or will Medicaid not allow this?

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Thanks for the info. It was very helpful. I think I am just going to have him sign over the policy to the funeral home to guaranty his funeral will be paid for. I am told the funeral home will return anything over and above the funeral expenses to Medicaid at his passing. I don't want to risk him not being eligible for Medicaid over $2700 or delay applying for it.
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If you withdraw dividends, will there be enough left with the policy to make it worth signing it over to the funeral home to cover expenses-check with your agent and the funeral home to see if the balance that will pay out upon death will do what you want it to and whether the funeral home policy will be within limits for your state's medicaid? If you withdraw the dividends, they will become income in the month they are withdrawn and must be included in the Medicaid application. The dividends cannot be given away; they must be used for the care of the individual. The dividends will take a single person over the limits for assets on Medicaid (under $2000 in most places) and so you would want to delay applying for Medicaid until after that one-time income event and spend-down. The money could be used to pay for clothes, a nicer wheelchair or power lift chair, etc. You just have to make sure you don't exceed limits or gift before applying. And the dividends will show up in Medicaid review as you have to provide copies of policy, bank statements, etc. - and the withdrawal may affect your parent's tax situation later - will there be enough money to pay any taxes due next year?
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