“I’m helping my dad file for Medicaid to help with the nursing home. He has a life insurance policy. Our caseworker at DHS is asking a ton of questions about it. Can they take it away from him?”

Answer:

The short answer is no, DHS cannot take your father’s life insurance policy from him. But it’s more complicated than that. He could be denied Medicaid because of that policy.

The first thing you should know is that the death benefit on a life insurance policy is safe. It doesn’t matter whether the policy is meant to cover a person’s funeral or simply pay to his kids; the death benefit cannot be claimed by DHS.

The second thing you should know is that most burial policies are safe. DHS allows applicants to own certain assets, and burial policies are near the top of the list. However, the policy you described probably wouldn’t qualify as a burial policy by their definition. Just saying that an insurance policy is meant to cover someone’s funeral is not enough to officially make it a burial policy under Medicaid rules.

So if burial policies are safe and the death benefit on any type of policy is safe, what’s the problem? Why is DHS asking questions about the policy? The primary concern is any current cash value the policy might have. Many life insurance policies build cash value that is immediately available to the owner. DHS counts that cash value as an asset just like they count money in the bank. That’s probably the reason you’re getting all those questions.

The Medicaid application process can be very stressful, and there are a ton of pitfalls you can hit along the way. If you want to learn more about that process, check out our website. But if a Medicaid application is on your immediate horizon—don’t wait. Call today for a no-charge strategy session and check out our website to learn more.

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