Medicaid can't take out your life insurance policy while you're still alive. However, depending on the face value of your policy, it may count toward the Medicaid asset limit, making you ineligible for Medicaid. A term life insurance policy has no investment component and does not accumulate cash value. It is not an accounting asset and will not affect Medicaid eligibility.
Medicaid's “initial spending” rules on life insurance are important if you have an older parent who needs a long-term nursing home or assisted living care. Hurley Elder Care Law can review total assets, as well as life insurance, and help guide you toward the most advantageous path to meeting Medicaid requirements. On the other hand, if you currently have a life insurance policy with a cash value component, you may not qualify for Medicaid, as the investment could place you above the Medicaid asset threshold. Research Medicaid's cost-cutting rules for life insurance in your state before developing any cost-cutting strategy with a life insurance policy.
Are you struggling to keep up with the premium payments for a life insurance policy or do you no longer need one? For those who can afford it and who can qualify for coverage, long-term care insurance is the best alternative to Medicaid. If the insured survives this period, beneficiaries will not receive the death benefit because it will expire (if it is not renewed or converted into a permanent policy). On the other hand, whole life insurance accumulates a cash value that the owner can access, so it can be counted as an asset. If your parents have life insurance, Medicaid's cost-cutting rules may seem complex with all the rules, restrictions and requirements.
Coverages and other features vary between insurers, vary by state, and are not available in all states. Therefore, your father's permanent insurance policy is exempt and will not count toward the Medicaid asset limit. A life insurance policy that exceeds the exemption amount does not mean that they are not eligible for Medicaid. For example, if you apply for Medicaid and your life insurance has a cash value, the cash value of your life insurance policy can easily cause your overall assets to exceed the Medicaid asset limit.
This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provision, limitation or exclusion expressly set forth in any insurance policy. Having Medicaid doesn't automatically disqualify you from getting life insurance, but it could indicate that you'll have trouble qualifying for certain life insurance policies based on your income.
