My Mom is a beneficiary to a life insurance policy. How can she avoid this affecting her community Medicaid?

@oliverag - I'm in the process of applying for Medicaid. I, too, had to show the two policies my mother has, one for $1500 and the other for $1000. If they want it, they can have it because I'm grateful taxpayers (of which I'm one) are going to pay for the bulk of her care.

yellrihis...

I am glad to hear you explored options to preserve the life insurance proceeds for your mother's benefit while she is receiving Medicaid benefits.

Since you already sought the advice of counsel (I would never recommend one NOT seek legal advice if they felt it in their best interest to do so) I will tell you that you do not need a lawyer to participate in a Supplemental Needs Pooled Trust (SNT).

As you have discovered, this is an existing trust arrangement already established by a 501c3 non-profit specifically for Medicaid beneficiaries who are over the resource limit. As such, a new document is not being drawn; your mother (or you as POA if she does not have capacity) will be signing a joinder agreement which is a pretty straightforward document. The trustee will explain the circumstances and procedures for distributions for mom's needs and what happens at mom's demise. If at anytime you feel uncomfortable you can always halt the process and seek counsel.

Another consideration is notifying Medicaid of the change in financial circumstances. Will the attorney do this as part of the fee in question or are you comfortable doing that yourself?

Money from the trust can be used to pay mom's attorney AFTER it is placed in the trust. Technically, the funds could be used to pay the attorney before being placed in the trust as well but you might get some push-back from Medicaid and it is not worth taking the risk.

As mentioned a moment ago, you will make requests for distributions from the trustee. Usually bills are paid and then submitted for reimbursement. Some organizations will allow a "purchase order" to be submitted for an advance distribution towards a purchase and recurring expenses can often be set-up to be paid by the trust automatically. Most trustees pay bills every two weeks.

The downside to the SNT (some would say) is that it is a Medicaid "pay-back" trust in that any funds remaining in the trust at your mother's demise will first be used to either pay Medicaid back for cost of services delivered up to the cost of those services before any residual is distributed to heirs. (Alternatively, the non-profit organization can be the beneficiary of the amount due Medicaid).
If there is no money left in the SNT at mom's demise, then Medicaid will receive nothing back.

Some look at this as a negative but I look at it as good public policy. As noted by other posters, Medicaid is a taxpayer funded program for the needy - not a bank for those who have assets.

Alternatives? Both Mr. Heiser and I made other suggestions earlier. It is possible to use more than one alternative simultaneously.

I mean medicade...not Medicare

Dad has 2 VERY small insurance policies. Before he was accepted into the veterans home, he was in another home and I applied for Medicare. He would have to cash in his insurance policies to qualify. Cash value was less than $500 each!

Absolutely the $60k was earmarked for mom's care so it would not be right, to abandon it or somehow try to have it go towards anything other than mom's care, I sort of wonder why the question is even being asked. Yes it will mean a few bumps in the road with MedicAid, but they, and any care providers, will just be happy to see their bills are paid, as they should be.

You write: "She left her this money so that she could be taken care of" ... i.e., take care of your mother wherever she is. While it may affect Medicaid monies, i.e., taxpayer dollars, it's doing exactly what your late-sister meant it to do...take care of your mother.

I, too, am paying down my mother's money for her care. It's not my money, it's her money.

Taxpayers should not have to foot the entire bill for our elders, especially if people have money to pay for their medical care. I'd suggest you spend it down on your mother (it's her money).

I hired a Medicaid consultant along with an Elder Care Attorney. I am thankful Medicaid is available to help me and my mother. Think about what would happen if it weren't available.

I've also kept up her Medicare and BC/BS to help her get the best care she can while in the facility.

My mom had a life insurance policy in her name with me add the beneficiary. There isn't a big cash value, however, there is a $16,000 benefit for burial when she dies. Will this count against her? I've asked for Medicaid for her already. Waiting for a response from them.

Thanks for any assistance with this question.

contact an elder law attorney before you decide anything. He/she can assist you and will know the laws/regulations regarding assets and Medicaid

wamnanealz which part of MD are you in? My home is in Mont Co but I am very close to Frederick County and I think I found a good elder lawyer but the prices are outrageous :( brit

To set up the SNT does one need to seek legal council first and have the lawyer set it up, or can I just go directly to the non profit agency that handles the SNT? to sum it up what purpose those the lawyer serve versus the agency? Can money from the claim that will be placed in the trust be used to pay for the lawyer services?

I met with a lawyer and he advised in utilizing a SNT as well as advised against the forfeit of the claim. thank you all for your advice. My mother does not own a home, since she lives with me, she also purchased funeral services many years ago. I am curious to know how difficult it would be to place a noncountable claim through the pooled trust? Has anyone had issues with this in the past? What are the downsides to the SNT? Are there other alternatives besides the SNT? And is the SNT the best solution?

Chicago1954, the money will be used for her care, I just needed to know what was the best option to take so that she doesnt lose her medicaid benefits or have any interruption of service. If the money were claimed without knowing the repercussions would cause her to lose her daycare services as well as SSI, and the claim money would not be enough to cover those needs. My mother was fortunate to recieve Medicaid benefits in such a short time period, but this only occured after many letters to the governor and other local department heads from elder affairs. I dont want to have to reapply, for fear that it would not be so easy the second time, and she may not get the same care that she is currently receiving.

Yellrihis, I am trying to figure out, if the money was left to her, for her care, why it isn't being used for that? What else does she have to spend it on? Yes, you could pre-pay her funeral expenses and that could be $12,000 or more.

I agree don't forfeit the claim. See a lawyer as what you have to do. But I am thinking that whatever you do with the money, medicaid will know about it and it will have to be used up before medicaid will pay a dime. Just my opinion.

Do not forfeit the claim. Pls follow Mr. Heiser's advice. Your deceased sister made those premium payments out of her own money with the specific intent of helping your Mom.

And please I apologize to Gabriel Heiser and Ralph Robbins, who are obviously trying to help us be offering good advice for free. I do not wish to disrespect both of you. I know there are good lawyers too. It is just hard to find them. My daughter is a lawyer and she is very reputable!

But Elder care lawyers are only looking our for themselves and will take your money also! I had one and he cheated me! He told me I had to have another will made out in MD, when I already had one registered in PA. He lied because I didn't need another will. Then he tried to make me "Update" our living wills and POA papers. Again another way to cheat me of thousands of dollars. It is so hard to find a reputable lawyer who will be fair and actually HELP ME……..

The receipt of the proceeds from the life insurance policy (countable asset) is most certainly a Medicaid disqualifying event.
However in Florida, if countable assets are disposed of in manner that does not impose a Medicaid eligibility penalty in the same month they are received, it is quite possible that no penalty will ensue.
Otherwise, for each month your mother is over the asset limit of $2,000, she will not be eligible for benefits.
In addition to the other suggestions provided, there may be other options to preserve the proceeds for your mother's benefit while she is receiving Medicaid.
Consider a Personal Service Contract between you and she. The value of the contract can be paid in lump sum to you without penalty (may be a taxable event).
Also consider using a Supplemental Needs Pooled Trust. Transferring funds to this existing irrevocable trust sponsored by 501c3 organizations allow her to maintain Medicaid eligibility while having access to the funds transferred for almost anything related to her health, maintenance, and welfare while receiving benefits.
Does she own a home with a mortgage that can be paid down?
I encourage you to explore all the options available to preserve the cash for her use while she is receiving Medicaid benefits.

Im my moms power of attorney thevwas going to take hers to if you orvany one who has power of attorney call them put it in your name she will be thensure you will be the owner but also have the take the payment out of your account instead of your moms so the state dont see it whrn you have to show them her bank statements trust me i just did it

If your mother "disclaims" (refuses) the proceeds of the insurance, the Medicaid department of your state will treat it as if she received the money and gifted it to the person or persons next in line according to the policy's beneficiary designation. Such a gift would cause your mother to lose her Medicaid for a certain number of months.
Thus, it would be better for her to accept the money and immediately convert it to something not countable, e.g., a Medicaid annuity, prepaid funeral and burial, household items, new car, etc. I give a lot of these suggestions in my Medicaid Secrets book (by the way, the 2015 edition is just out. www.MedicaidSecrets.com).

Consult an elder law attorney.

I agree with all above. See the attorney. As much as possible, use for her outside of medicaid.

Agree with other posters. Don't try to do anything with the money yourself until you consult a professional. You might be able to use some of the proceeds on your mom's behalf to pay for the help of an Elder Law attorney.

One thing we did was to pay all funeral expenses in advance for my step-father and mother.

I would recommend seein an Elder La Attorney near you. Waiving the insurance proceeds, if you could, would be like waiving an inheritance, and Medicaid would treat that the same way as if she gifted the money. The funds would gone and the penalty would start only after she qualified for Medicaid. There may be other ways to use the money or preserve the money under Florida laws as opposed to waiving her right to the proceeds.

I had to change the beneficiaries on all sorts of stuff including policies and wills.
My will goes into a trust for the designated beneficiaries that is set up for care of my wife. Upon her death the trust will be covered by our wills and go to the heirs.

See and discuss this with a qualified elder affairs attorney. Never rely of posted advice.

I found grist of this disclaimer on TechByter Worldwide. {adapted for my postings}
Regarding my posts: I participate and post for informational purposes only. I assume no responsibility for accuracy. Any actions you take based on my posting information are entirely at your own risk. Products and services are mentioned for informational purposes only and their various trademarks and service marks are the property of their respective owners. I am independent; I collect information from various Internet sources share it thru Dave M. Knowledge Network