If dad goes on Medicaid, will they collect the payout of his life insurance upon death? Who is responsible for premiums?


My FIL has 2 life insurance policies. An elder care attorney told us to cash them in if they have cash value. We have checked and both of the policies cannot be cashed in, they only pay upon FIL's death.
My first question is: when he ehausts his money/assets and goes on medicaid does the state collect the value of the policies upon his death to be reimbursed for his expenses?
Second question: if these are not allowed to be attached by the state and my husband receives the value of the policies, is he responsible for the premiums (because FIL will have little money left for personal expenses). The first policy is through the veterans and is over $700 a year premium for a 10K policy and the other is over $800 a year premium for a 7K policy.
My husband is questioning if he has to pay these premiums out of pocket if it will benefit him to do so. If if just ends up going back to pay medicaid, I am guessing our only option is to drop them. One feels bad doing that because it seems like all the premiums paid over the years have just been wasted.

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If the policies have no cash value, they do not have to be cashed in and Medicaid will not count them as assets for Medicaid eligibility purposes. The next question is who is the beneficiary? If it is your FIL's estate, then, yes, the state can and most likely will seek reimbursement from the proceeds following FIL's death. If a particular person is named as the beneficiary, then the state most likely will not be able to make a claim against those proceeds (this may vary by state law, so you'll need to be sure about this before deciding what to do). If your state is one of many states that only make reimbursement/recoupment claims against the probate estate of the deceased Medicaid recipient, and someone other than his estate is named as the beneficiary of the policies, then you are safe and the state cannot touch them.
Since your FIL will not be permitted to shift any of his income to keep up the premium payments once he is on Medicaid, you must decide if it is worth it to you to keep up those payments, assuming you are named the beneficiary. I hope that helps!
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Wow this is a really good question. I hope Attorney Heiser steps forward and answers this for you, he is the Medicaid specialist and gives excellent information. My only suggestion at this point is do not stop paying the premiums until you get an answer.
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