I completed the paperwork for my mother's Medicaid nursing home application and the annual recertification last year. She has three life insurance policies. I did not realize that they had a cashout (surrender) value until just the other day. I checked on the requirements in California and found that the amounts exceed MediCal's limit. Now, I don't know what to do. I'm afraid of alerting them to the mistake and afraid of them finding out on their own. Should I just cancel the policies? Thank you.
COVID de-staffing makes it a lot harder for anyone to process applications, much less amend or update. Consider how difficult it may be to take documents to any requesting person or agency due to COVID restrictions. Phone lines are busy. Nursing homes have to be so careful now. An attorney can probably help a lot in this process. He/she will have the records as proof of what/when any documents are submitted and to whom.
I'm trying to figure out how either you, Mom or Medicaid overlooked this during the initial application process due to what my spouse and I had to do for his nursing home application:
Medicaid application asks on the initial application if the applicant has any life insurance policies (yes or no). Then it requires answering as to type - (burial, term or whole life). It asks if the applicant has an annuity from any source (yes or no). Next the face value and the cash value for every policy must be listed.
The applicant must list the names of all owners and beneficiaries of any and all policies. Next a copy of each entire policy and annuity must be submitted. It asks if any policies have been cashed out and what was the amount. If yes, list the date. It asks if any annuity was in a payout yet. Yes & no & documents required for any and all.
This line of questions and documentation doubled for marrieds as the non-applicant spouse had to submit any separately owned insurance policies. In our case, there was a paper application review and face-to-face interview for verification purposes on the initial application.
Even though my spouse had a low value policy, we both had a cremation policy, and he had cancelled policy, we still had to submit every policy for each of us.
It is not a mistake if you did not have the information to report at the time.
Finances are fluid, not always static throughout the month, or year.
If your Mom is close to the maximum limits of assets and income,
do not be afraid. Medi-Cal has formulas that no lay person can fiigure out by themselves.
You could call the Life Insurance person who may have sold the policies to your Mom, or the company. If she is already in the NH for this past year, you may need to a) surrender the cash values to the NH; or 2) Assign the NH as beneficiary of the policies. (If they are paid up with no more premiums due.) 3) If the premiums were due, and the premiums are defaulted, you need to find out the true status of the policies.
You can report the policies this year on the annual recertification.
Did you already report the policies last year? Just not the value?
You may need more information, start with the insurance companies who surely must have experience with this.
But you have done nothing wrong, not knowing everything.
Proceed as if you are not afraid, because life is too short for this many worries.
What can be done by paperwork can be undone by more paperwork.
The stocks brought my mother in law's assets slightly over the limit, but we were able to put the money in a Medicaid approved irrevocable funeral fund and it wasn't a big problem.
How this goes for you is probably dependent on your county's Medicaid office, though. We dealt with another county on a different issue (spousal refusal- which is legal in the state) and their lawyer was a miserable man who enjoyed his job which seemed to be harassing the elderly community spouse and shaking dimes out of their pockets.
Some states CRSA MMNA are high. Like TX is almost 3k, like almost the SS max payout amount. So, if you're a youngish wife with a big mortgage, car note, you're able to keep most of the older hub's who is now in a NH SS$ if you get your documentation in.
I'll let you know. I haven't found a lawyer yet who can advise me.
if her policy is really old, like last millennium, like from the 1960’s or 50’s, they are a thicket of legal size, double sided paperwork. Policy will read the face value on the first page but you have to get into it to find out if it’s term or whole and how it’s dealt with when paid up and if it produces a dividend & what must be done with the dividend. It’s not always clear or easy to decipher. You might want to run the policy by an insurance broker to see what’s what and if it actually is a term policy but pays a dividend and it’s the dividend that’s pushing up its value. If the dividend has to get plowed back into the term life policy, it can’t be cashed out and so doesn’t count for Medicaid. It’s still whatever the face value was when policy was done.
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