Hello, my mom's resources are a few months away from being spent down. She will have to go on Medicaid to continue at the ALC, but there's one hitch. Before I knew what I was doing, I learned that Mom was paying 1/3 of her monthly SS check on life insurance policies for me and my brother, and encouraged her to cash them in. She refused, and I got bigtime flak from both of them for even suggesting it. After years of wrangling, I got him to at least take over paying on one of the policies. Now she needs to cash in that policy but my brother won't let go of it. We have a terrible relationship, and always have, and I am at a loss about what to do. Any ideas? Thanks.

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Hi, thanks for your response. They are all whole life policies. She was paying out more than 1/3 of her monthly income on the premiums and to help her make ends meet I took over paying on several of them, and made myself the owner. After some persuasion, my brother took over ownership and payments on one other. Now I hear that Medicaid will penalize Mom for these policies, and my brother is, shall we say, always been much less than cooperative, especially where money is concerned. He might not be willing to pay the penalty or cash out the policy and give it to Mom.

Compounding this is that I took over paying on several of the policies, and when the payments became unmanageable I cashed on of them out. Now I'm looking at having to pay the penalty for the cashed out policy, and fighting my brother over the policy he now owns. In short it's a Big. Freaking. Mess. I'm losing a lot of sleep over this.
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I'm a bit confused, what exactly is the situation on the life insurance policies.....are they are whole life policies owned by mom on her life but with you as beneficiary on one and brother as beneficiary on the other? If so then as whole life they will have a cash value that will need to be cashed in (as this $ is viewed as an asset by medicaid) with those funds spent down before Medicaid eligibility. As mom owns them, she can do this whether you or your bro "approve". If this is the situation, I'd go go online ASAP to the insurer to see what the procedure is to cash out ASAP as it could take a bit of time. Mom just cashes it out, brother does not need to "allow" & you let him know after the fact. Yeah it will be nuclear winter afterwards but sounds like its already that.

There is also the possibility that mom makes bro the owner of the policy - if the insurer does this. But there could be transfer penalty issues of the gifting of the policy value to bro. If bro cannot be completely counted on to pay the transfer penalty 100%, then I personally wouldn't even think of going this route ever. I'm not sure just how medicaid evaluates the value amount on this (& I'd bet it's a complicated equation) but could be quite a significant amount depending on value of policy and hiw long mom has been paying on it.

If their whole life but each ownedyiuour & bro, but mom has been paying them, then they are NOT hers to cash out. They do not get included in medicaid info. But you & bro need to pay the premiums totally on your own. Now IF Medicaid does an indepth lookback into moms finances, all those premiums paid by mom on those policies could be viewed as gifting by Medicaid with a transfer penalty issued by Medicaid for $ mom paid on the premiums. Not a nice surprise!! You may want to review moms finances to see just what type of figure it adds up to and how much of a penalty could be placed.

If they are term life insurance policies owned by mom, you need to find out how your state medicaid evaluates those. Some states limit the value of term to be ok for medicaid. My moms was within term limits for TX, so I'd didn't need to deal with this. But for term that have the deceased estate as beneficiary (this is often done) the $ could be recovered by MERP after death as its an asset of the estate. It could well be that state will require term beneficiary to become the estate rather than you or bro. but that's up to just how your state administers medicaid.

You need to clearly & exactly know the specifics on the policies.

I'd bet the look back done on your moms application could be shorter as she's in AL already doing private pay. For my mom, who was in IL then moved into a NH (totally bypassed the AL stage), the look back was 3yrs 6mos and NOT a full 5 years. So maybe your moms review will be shorter so more limited penalty if it comes to that.

Please please PLEASE make sure that the AL mom is in will definitely allow for mom to continue to live there as a "Medicaid Pending" resident and will stay on the AL Medicaid waiver program once mom is approved & eligble for medicaid. The application could take months to process. My moms took 5. A facility does not necessarily need to allow for "pending" status for payment during the application period. A lot of states do NOT even do AL medicaid waiver programs so if yours does consider mom fortunate. If moms AL allows her to be "pending" again consider mom to be fortunate as most AL do not participate in waiver programs.

It's good you are looking into all this now btw, as there's always something...
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