By Paul Lorrah
In some states, yes.
Some states require the state to be named as first beneficiary of the policy if the death benefit is above $1,500.
Other states will only gain access to the funds if they are paid to the Medicaid recipients estate.
Types of life insurance;
Term policies [meaning they expire after a certain time period]. These policies do not build cash value [meaning they have no value until the person passes away].
Whole life policies - these policies generally do not expire. Additionally, these policies build cash value [meaning they can be "cashed in" or cancelled before a person passes away and they can receive a cash payment].
Because whole life policies have value, this amount counts towards a person's resource limits when applying for Medicaid benefits. Therefore, the policy may have to be cashed out prior to applying for Medicaid.
Term policies would not have to be cashed out because they have no value.
Additionally, the Medicaid agency does not allow for insurance premium payments when calculating the Medicaid applicant's income so other plans must be made for payment.
Medicaid planning and approval can be difficult if the applicant owns resources.
We have strategies that would allow an applicant to retain their life insurance policies if our Asset Protection Plan calls for it.
Contact us today for expert Medicaid planning, asset protection services