1000 A MONTH!

Question: Is my life insurance policy considered an asset for Medicaid purposes if I need to go into a nursing home and apply for benefits? I live in Florida.

Answer: Without detailed information, I can provide you only a general overview of how life insurance relates to eligibility for Florida Medicaid longterm care benefits.

The most important factor is what type of life insurance policy you have. There are two types of policies: Term life and whole life. If you own a term life policy, it will have no impact on your eligibility. A term life policy pays out only if you die within the term you’re paying for. It has no accumulated cash value.

In contrast, a whole life policy may have an accumulated cash value that you, the owner, can access. This is the amount of money you would get if you chose to cancel the policy (not the amount it would pay out of you died). If you own one or more whole life policies, the combined cash value up to $2,500 is considered exempt. Anything in excess of that amount would be considered a countable asset. Under current rules, an applicant may retain up to $2,000 in assets.

You have not mentioned if you have a spouse. If you do and if your spouse also owns a whole life policy, up to $2,500 of that policy is also exempt; anything in excess of that amount is a countable asset. Under current Florida Medicaid law, the well spouse may retain up to $120,900 in assets.

If the cash value of your whole life policy exceeds the Medicaid limit, there are several steps you can take to eliminate the problem. Please be sure to consult with a Florida Bar Certified Elder Law Attorney.

Joseph Karp, a member of the Florida and New York Bars, is a Nationally and Florida Bar Certified Elder Law Attorney and founder of The Karp Law Firm, located in Palm Beach and St. Lucie counties. The firm assists clients with wills, trusts, Medicaid and VA benefits planning, asset preservation, probate/trust administration and estate litigation.