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 www.MedicaidSecrets.com for this answer.