Life insurance and Medicaid
For Medicaid qualification purposes, I have cancelled two of my parents life ins policies with plans to deposit the pay funds in a death account, however Banks give me a blank look and the run around to all of their vast customer svc depts because nobody knows what I'm talking about even after explaining the intent. I'm told to get the help of an attorney to create a trust. I really thought this would be simple but why would I think that! Nothing about aquiring care for the elderly is what a shame! Is there a simplier process for saving this $1,200.00 each towards my moms and dad end of life needs w/o their Medicaid being jeopardized? I'm sorry for sounding sour; I not only appreciate this forum, I really need it. this site keeps me on even keel EVEN when I feel like I'm falling off the earth.
Do the policies have contingent beneficiaries. I ask because when one parent passes, the other will still be written to the other parent, so would probably go to the estate. If both parents are on Medicaid, I wonder if anything in the estate would be subject to recovery. Maybe the person on our board who knows a lot about Medicaid will be along soon. I wonder if contingent beneficiaries could be added to the policy.
I read here the other day about people diverting life insurance policies to a funeral home to pay for burial expenses. Are both of your parents' policies $10K? Maybe someone will have an idea how this could be done if your parents need this.
As it stands now, I would say that yes, the $10K received by one parent will have to be spent down. If when that parent passes, if the death benefit goes to the estate, then it may be subject to Medicaid recovery. I am not an expert, though, so don't take my word for these things.
Shb - have you gone on-line to see if it's possible to do that way? For small value policies with bigger insurers, a lot of things can be done on-line as it's not worth having customer services to do it. If it's under 10K, there's a good chance, you can do whatever on-line with your parent as you are their POA. 10K is the tipping point for paperwork on financial stuff due to Homeland Security documentation needed.