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I am named beneficiary on death benefit $1500 from union pension of my stepfather. he passed away Nov 1, 2016 in a local nursing in upstate ny. must this money be surrendered to the state?

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No, beneficiaries of insurance are not pursued by MERP.
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As mentioned here, no. It really wouldn't make any sense to name someone beneficiary if they're going to have to turn right back around and lose the money, think about it
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Does this also apply to term life insurance?
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I think the dollar amount is key. $1500 should be fine and you should be able to keep it. Larger amounts would have had to cashed in before Medicaid would have been approved. Since this is an Union benefit, I do not think it was eligible to be cashed in anyway.
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As long as the beneficiary is an individual or entity that is not the Medicaid recipient the death benefits are not subject to Medicaid Estate Recovery.
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Insurance or pension death benefits are not subject to withholding by anyone other than to the beneficiary. I am sorry for your loss.
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If you're the named beneficiary, I don't see wherein lies the problem.
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Yes, applies to term insurance as well, not subject to Medicaid Estate Recovery if beneficiary is other than the Medicaid recipient (yes, sometimes the beneficiary is the "Estate of the Insured" in which case it would be recoverable in every state as a probate asset).

What if the beneficiary is a predeceased spouse and there is no contingent beneficiary named in the policy? Benefits will revert to the estate of the insured and even worse, will likely cause a probate matter where none would have existed if the proper beneficiary designations had been updated.
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Money from an insurance policy is the
beneficiaries. They do not have to use it for the insurers bills. I had a friend who had a $100,000 insurance policy with her daughter as beneficiary. My friend assumed her funeral expenses would be paid out of it. The daughter chose not to do it. The stepfather had to pay. I think u don't pay taxes on the money is some states.
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millerteresa - Larger amounts really doesn't have any bearing in my understanding. If the money could be considered an asset for Medicaid, they wouldn't care if it was $100, they'd take it! But, that is if there is a "cash value" to the insurance, as in a Whole Life policy. It depends on whether the type of policy has that cash value or not... My Mom had policies with a cash value and I had to cash those in and "spend down" (sorry, dumb!) so she could get on Medicaid.
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