Does Whole Life Cash Surrender Value Count For Medicaid Purposes?

Question: Mom has outlived her Whole Life Insurance Policy. She's in a nursing home and on Medicaid. The policy had a Face Value of $1,000.00 with a cash surrender value of $4,500. Because the face value was under $1,500, it wasn't countable as an asset regardless of the cash surrender value.

Now, because it has matured, it will be a countable asset. What are my options? Medicaid has know all along
that Mom had this policy and had said as long as it wasn't cashed out it wouldn't be counted. I'm thinking of putting the $4,500 check into her checking account, wait for it to clear, and then immediately go to
a funeral home and set up an Irrevocable Burial Trust.

Answer: The $4,500 receipt will need to be reported to the Medicaid department, but if it is spent down or converted to a non-countable asset (such as a pre-paid burial/funeral) before the end of the month of receipt, it should not affect the Medicaid recipient’s eligibility. It is counted as income in the month of receipt, but as an asset if any part of it remains at the start of the next month.

Thanks to Gabriel Heiser of for this answer.

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Medicaid Questions.

Subscribe to
Estate Planning Hub

Your First Name

Your E-mail Address

We keep this private.

Follow the Estate Planning Blog.

--by Beth Heikkinen
Marquette, Michigan
I just want to thank you for this site. It answered my questions. I think many people that do research on the net take it for granted and when they find what they are looking for they forget "someone put time, money, etc into providing me with this information."

Thank you!

Like This Site

Visit Our Social Media Pages

Become a Fan of Estate Planning Hub on Facebook Follow EstatePlanningHub on Twitter Follow EstatePlanningHub on Google+ Subscribe EstatePlanningHub Video on YouTube

Get a PDF version of this website and its sister site here.