Do I still qualify for govt assistance?

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Date Joined Aug 2008
Total Posts : 480
   Posted 5/6/2012 2:02 PM (GMT -6)   
My mom's best friend just got diagnosed with early AD and she has no income to speak of. I told her she should apply for govt assistance but she has a life insurance policy in her name that was purchased years ago for her kids. This means they are the benefactors when she goes. I tried to look this up online but got very confused as to whether this is considered an asset of hers? I thought if SHE is the benefactor of a policy then it's considered an asset. Am I wrong? Does having a policy mean her kids will not get a cent when she goes because the govt will basically get their money back when she passes?

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   Posted 5/6/2012 4:09 PM (GMT -6)   
As a taxpayer, I certainly hope so.
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Date Joined Aug 2008
Total Posts : 480
   Posted 5/6/2012 4:13 PM (GMT -6)   
Why would you say that since the person receiving govt assistance is not the one getting the payout?

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Date Joined Apr 2004
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   Posted 5/7/2012 7:14 AM (GMT -6)   
A life insurance policy is not considered income and therefore can not be included when applying for government assistance. It also can not be touched in the event of her death.
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Regular Member

Date Joined Aug 2008
Total Posts : 480
   Posted 5/7/2012 8:13 AM (GMT -6)   
This is what confused me from what I read online:
A policy with more than a minimal amount of cash value (usually $1,500 or more depending on the state) must be liquidated with the proceeds spent down on care.
A policy with no cash value does not need to be liquidated but the death benefit will be subject to Medicaid recovery efforts to return the amount of money spent on care.
Many states will exempt a "final expense" policy if the full death benefit value is assigned to a funeral home.
Assignment of a life insurance policy for less than its fair market value is a violation of asset transfer rules if done within the 60 month look back period.
A policy owner has the legal right to convert a life insurance policy into a long term care benefit plan at its fair market value and extend their spend down period by covering cost of care while preserving a portion of the death benefit until exhausted.

windy city
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Date Joined Dec 2010
Total Posts : 607
   Posted 5/7/2012 10:28 AM (GMT -6)   
Chiming in, I'm from the ostomy forum.

I'm not definitely sure if life insurance is considered a 'countable asset.' From what I've just googled, it is. If it is, she wouldn't be illegible for Medicaid. Based on 'income', your allowed a certain percentage above the poverty level, depending on the number of members in the household, for example in my state it's approximately $39k for a family of 3. Other income, referred to as non-income, includes assets such as total $ in the bank, stocks, bonds, IRA's, insurance policies, gifts....this can not be more than $2000 in the state I live in. Not included is home, car, furnishings's. Depending on her age, in elder Medicaid cases, those non assets, a home, are in fact included and would need to be transferred.

If she does want Medicaid, they would indeed make her 'spend down' this asset. Basically cash it out and she wouldn't be a Medicaid recipient at this time, she'd have to provide all receipts to her case worker showing payments for medical expenditures, and when all of it is gone, she is eligible. If there isn't any cash value, upon death, Medicaid will indeed recover this money, less the funeral expenses.

My suggestion is calling several elder law attorneys that are Medicaid knowledgeable in asset planning. Some are more knowledgeable than others. Some host seminars, write books on elder care, those are the knowledgeable ones. Again, call several because you will get different answers every time, you'd be surprised. And if they don't know, ask them for a referral of an attorney that would. There are ways in providing health insurance to those in dire need without giving it ALL away to the government. Many attorney's will provide free consultations over the phone, some want you to come in and will provide a free in house consultation. This can become very time consuming. Be prepared. Also, you need to be very certain in obtaining a very experienced attorney, the wrong one will cost you in more ways than one. But not being insured, with a pre-existing AD condition, you will lose more in the end without proper medical assistance.

Best of luck..........
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