Hello everyone, I understand you arent lawyers but wondered if anyone has any info for my sister and I. My 85 year old mother lived with my sister for 3 years and the last year we shared her back and forth between us both. In November it became obvious she needs 24/7 care, a hospital stay ended her up in a nursing home. She is at the point now that it is time for her to try to get on medicaid. Everything is good except she has a life insurance policy that has a cash value. We are trying to see how we can NOT have to cash it in to pay for nursing care or we will not have the means for funeral arrangements once she is gone. I have had people say to assign it to the funeral home in an irrevocable trust and then its not counted as an asset but that the state can come after it once she is gone? I also have heard to turn it into a paid up policy and then it will not count as an asset, but not sure if its true. I have tried to get an apt with a elder lawyer but the consultations are not free for this type of issue Was quoted 400 just to talk to us . I'm not a rich person and just want to help my mother get the best care while here but have the best funeral for her when she is gone. Thanks for any input.
so….what her State places as the maximum threshold for the value of a life insurance policy to be considered an exempt asset matters.
Like for Term, since it pays after death, if 10K or under as its face value that tends to be ok as it obstensibly will be used for funeral & burial costs. But over 10K will require a beneficiary change that becomes the State as the new primary beneficiary.
Whole Life will need to be cashed out & spent down. Each State will set a max $ value as to what the preneed policy can be.
The sticky for funeral policies being OK for Medicaid is some States have all sorts of other requirements that the policy will have to have in place. TX does this and it has requirements for the type policy, type of FH, it’s licensing, interest paid, yada yada. 1 important requirement is that the policy has to -HAS TO - name the State as the beneficiary of the policy for any excess funds not used. The push behind this imo is that there are IFT Irrevocable Funeral Trust and Burial Contract insurance agents that hype these to senior's as a way to retain $$$$ to circumvent LTC Medicaid spend down. The IFT contact mills do chicken dinner type of asset protection seminars.
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On another tangent, has anyone told you in detail about your moms required Share of Cost? If not, please pls realize that as of the date she files that LTC Medicaid application almost all her monthly income must be paid to the NH as her SOC. All she gets to keep is a small Personal Needs Allowance that tends to be in the $50-$75 a mo range. PNA is determined by each State. It usually gets used for her at the NH beauty shoppe and other small incidentals charges as Medicaid does not pay for these. If her Nh charges for in room cable or phone, it can use up her entire PNA $.
You may want to consider using her spend down $ to buy her extra eyeglasses, hearing aids, clothing better suited for going through the laundry system in a NH. Stuff goes MiA all the time. For my mom it was Shoes that flat disappeared regularly. It is what it is. If you have a way to safety store extra wardrobe for her, that could be a good thing.
Remember for the Application she will have to have a bank statement that shows her getting under the LTC Medicaid max for income and then ending the month under the LTC Medicaid asset maximum. So you need to get whatever spend down done and cleared thru her checking account so that all gets done within the month. For most State's income max is $2,901 and nonexempt asset max is 2K,
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If Mom has no assets over the amt allowed by Medicaid where she resides or monthy income does not go over the cap, thecapplication will be easy. I made an appointment with the Social Service office. The caseworker did the application on the computer for me. I had what papers I thought they would need. Was lucky that Mom had saved 5 years of her bank statements. My state only allows 90 days from date of application to get them all the info needed and to spenddown any assets. My Mom went into LTC with 20k which paid privately for two months. That gave me time to get everything needed for Medicaid. The 3rd month Medicaid started paying.
One had the funeral home listed as an irrevocable beneficiary so that was okay.
The other one just had the funeral home listed as a beneficiary so Indiana Medicaid said to keep that one, we had to change the owner to the funeral home (but he still had to make the payments). We and the funeral home had to fill out some forms from the life insurance company and did that.
This requires the knowledge of an eldercare attorney with knowledge in diverse assets. Depending on the state asset threshold and how much the cash out value is you may or may not have to relinquish the policy.
Prepaid funeral expenses are also allowed expenses that should be used to spend down her assets.