Medicaid denied my mother because of a life insurance policy that has accumulated some money? - AgingCare.com

Medicaid denied my mother because of a life insurance policy that has accumulated some money?

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My mother was denied medicaid in Texas due to her life insurance policy accumulating some money that would put her over resources to get the medicaid help she needs to stay in the nursing home. I was asked by the nursing home to make the policy irrevocable and I have done that, but was told that does not change ownership of the policy and the money will still be there. My mother came into the nursing home as a medicaid-pending patient in September 2015. Has anyone experienced this? The nursing home should have told me to change ownership of the policy.

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Whoever you talked with about Medicaid should have asked you, when you signed up, if there were any policies that had cash value and told you that upfront what to do. They are the ones that are responsible for this.

Anyway, it's true that the cash value belongs to Medicaid. That money is counted as assets. I'm sure that there are ways to plan around this with an attorney but I think that it is too late to do it now.

Take care,
Carol
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If you want to keep the policy in force, then borrow the cash value and use the cash to purchase a pre-paid funeral and burial policy (maximum permitted amount varies state-to-state). You don't say if she owns a home (exempt asset) but if so, the money can also be used for improvements to the home. If not, you also can simply spend the money on the nursing home bill till you are below the $2,000 maximum cash limit, then re-apply to Medicaid.
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I had this trouble too in Ohio. I turned the policy over to the funeral home. The funeral home said that this is done a lot. By doing this, any money left over after the funeral is paid for, will go back to the state.
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There are programs that let you convert a standard life insurance policy into a Long-Term Care Benefit Plan - allows cash value accrued through paid premiums to be converted into an account which you can use to pay for services and in doing so pay down assets and become Medicaid eligible sooner. As suggested by others, pre-paid funeral costs is a good start, but rather than turning the entire policy over to a funeral home which results in leftover going back to your states Medicaid fund, control the remaining assets yourself through a benefit plan and use to pay for other services.
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Have not experience it directly. If the policy can be cashed out for the accumulated value then that could be done, and the proceeds comingled with her other funds and thus could be part of the spend down for Medicaid eligibiltiy...Also, she could cash it in and buy a burial policy up to, I believe, a value of $15,000 or so and that is not counted as an asset for Medicaid spend down..

Grace + Peace,

Bob
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You can take a loan to bring down the cash value of the policy. The loan can either be used for Burial Insurance or a Burial Trust or Pre-Pay her Funeral.
They money can also be used for your Mother's benefit. She can spend the money on things for herself. Consult and Estate Planning Attorney to help.
Good Luck
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There are pitfalls to some of the above 'solutions'. but can be "ironed out".

( However it involves Working with a policy having a death benefit of at least $50,000)
Usually an Insurance company will offer LESS value in the policy than a conversion, The insurance company may tell you it is "not convertible" That may be a play on words as they refer to it as if you were going to "convert to something in their product line", but they do not offer it!

Often folks let a policy lapse, and "waste" the value, that is the best scenario for the insurer as they collected but never had to pay...

By "converting" the policy is taken over by the "new funder" and the current value of the policy is then converted into a monthly LTC benefit payable directly to the provider of care, no further payments by the insured are required.

As a result the outcome is TAX Free, and is MEDICAID APPROVED, a portion of the policy proceeds are set aside for final expense as well

I can be messaged privately if you need some help,
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