Mom is about to start short term rehab in a SKF and will be continuing into long term care. I haven't done the Medicaid application yet. I found a small whole life insurance policy she just bought last year. The cash value is $1700 right now and I think the Medicaid limit for that is $1500 so it will need to be cashed out. When should I do this? Before the application or after? Do I need to list it on the application if I cash it out now? Can anyone advise me on how to handle this? I want to do everything properly so as not to jeopardize her application.
They will tell you if she needs to cash out and use the funds from her whole life insurance policy before Medicaid will pay anything. Don't jump the gun, trying to guess what they will want. For now, just list the life insurance policy, and don't forget to list the premium as one of her monthly costs.
As you say, the policy will have to be cashed out anyway because she will no longer be making premium payments.
It sounds like other posters have provided the right guidance on this.
Since the cash value is over the typical $1,500 limit, it's counted as an asset, so you need to eliminate it to be under the asset limit.
The key is to list the policy on the application and include the paperwork showing it was cashed out and how the money was spent, which shows you were transparent and followed the rules.
I’m assuming that mom is in a State with 2K maximum for assets & $2,901 income maximum. So every dollar you as her POA can use now to do a spend down is important. Once she goes on LTC Med IAnd all she will have is a small Personal Needs Allowance, the PNA varies by State, but tend to be $50-$75 a month range. That is it for any $ she will have to use to spend on clothing, toiletries, hair cuts, etc.
also please pls pls do what you can to have mom stay in rehab for as long as possible. Every day she is progressing in rehab is another day to deal with her finances, packing up or getting rid of stuff, etc and before the LTC Medicaid application is filed. Speak with the PT & OT so that you have an idea of how she’s doing. If you need to find your old pom-poms, get them out and be a cheerleader to encourage her to do her rehab. Medicare as health insurance can pay up to 100 days of rehab with a copay if warranted.
There are many factors for this forum to correctly answer. It depends on the state your mother resides, her other assets, what is the income your mother brings in monthly what allowable expenses can be paid, now so on and so on.
If you are POA you can consult with an eldercare attorney that has experience with Medicaid Long Term Care in your state for the first hour free of charge in most cases. If you choose to pay for the service you can use your mothers money and it is considered an allowable expense that will not hinder the Mediciad Long Term Care proccess.