Life Insurance for Somebody Wanting to Apply to Medicaid

[yabadabadoo1026]

You can find flyers that tell about funeral trusts or assigning policies to funeral homes for Medicaid exemption. You will not find any about Mom never being an owner. It's just the way it is.

If Mom's on Medicaid and her son owns a million dollar collection of Elvis socks it doesn't affect her Medicaid at all. But if she gave or sold for less than full value the collection to him within the past 5-years it will definitely affect her Medicaid.

Same with life insurance. If she never had any ownership of the policy it doesn't affect her. The fact that the benefit is triggered by her death is not an issue. Only ownership matters. It's son's property not hers.

not at all questioning you but help me understand---assignment does not make the funeral home owner?????????, benefit would go direct to f.h and not thru a beneficiary?????????? and we see assignments all the time even when the insured is the owner and the funeral home needs assurances to get a jump on it all before the money shows????

 

[WinoBlues]

not at all questioning you but help me understand---assignment does not make the funeral home owner?????????, benefit would go direct to f.h and not thru a beneficiary?????????? and we see assignments all the time even when the insured is the owner and the funeral home needs assurances to get a jump on it all before the money shows????

Needs to be an irrevocable assignment.

 

[Gooner]

How so? Are you saying they'll have $2,000 in cash value in just a few years or that Medicaid looks at something other than cash value?

For starters..your $2k assumption is not universal. It is different for other states.

2nd, your assumption that they won't keep their policy is irresponsible. Your original statement didn't say a "few" years...if a senior is sold the right policy they will keep it and often add to it, this they will eventually get a substantial CV.

 

[yabadabadoo1026]

Needs to be an irrevocable assignment.

what are the mechanics of making this happen------is it paperwork that goes in with the app.

Looking for understanding because occationally I write some poor soul who can barely come up with a beneficiary they aren't even close with much less a contingent---ie nobody to even close out their affairs must less trust to not take the money and buy a truck with it instead,lol. Is this funeral home assignment an option in such cases ( but someone has to report the death/how would the funeral home know of that-------guess dead guy just has to have a card in the wallet " call xyz funeral home")

 

[JoshC]

No reason to sell term to that group. Just know the rules.

As for selling MA plans, why would any FE agent have a fit about that? It's a natural for the market.

Better question is what defines an "FE purist?" Is that an insurance salesman who hates the designated hitter?

 

[Newby]

not at all questioning you but help me understand---assignment does not make the funeral home owner?????????, benefit would go direct to f.h and not thru a beneficiary?????????? and we see assignments all the time even when the insured is the owner and the funeral home needs assurances to get a jump on it all before the money shows????

The funeral home has to be the owner and beneficiary. It has to be irrevocable. Ownership can be re-transferred to a different funeral home but never to anyone else.

In most states there can be no secondary beneficiary except the estate. Medicaid is first in line to collect assets that run through the estate.

The $2,000 limit in most states is not just the policy. It's all countable assets. So when their $900 SS deposit goes in they could have no more than $1,100 in the policy. If grandma manages to save $100 per month and builds up $2,000 (I know unlikely) she can have zero cash value. This is reason number 371 of why poor people don't leave any money in the bank.

Don't try to sell term insurance to seniors to cover a permanent need. That is what hacks and AARP does. Use different owners. Or Funeral Trusts like Settlers offers. Or just have the policy assigned to a funeral home WHEN a problem arises (usually several years in.) if the policy is only enough to cover the funeral, there is no issue at all with assigning it. If it's a bigger policy, they MIGHT want to consider reducing the face (if company allows) or even RPU (depending on amounts and their current health and insurability) and start a new policy (preferably with a different owner. )

 

[jdeasy]

A life insurance policy does not affect Medicaid eligibility until it has more than $2,000 in cash value.

Most folks buying FE will never see $2,000 in their cash value in their lifetime.

The cash value in a life insurance policy is a countable asset towards Medicaid or extra help.

It's not a separate entity. Anything in cash, savings, checking, non penalty annuity, etc. That is all countable to their state limit.

If the state limit where you are is $2000 and they have $1500 in other assets then they can't have more than $500 CV.

To avoid this problem you can have someone that is not also on mediciad or applying for Medicaid be the owner. Or they have a trust be the owner. That's also subject to state limits. Or assign ownership to a funeral home.

In reality the CV is almost never a problem since it's usually the only countable asset the FE demographic has. And it take a long time to get to $1500 or $2000 CV. Many will borrow from it to keep it from ever getting there too.

It's really not a problem. Just something we have to address and deal with regularly. It's a huge problem is you make it one.

 

[sirherbie]

So Jd how do you handle this?Since 90% of Fe clients are on Medicaid do you make

 

[Biggin]

The cash value in a life insurance policy is a countable asset towards Medicaid or extra help.

And subsidized housing.

 

[jdeasy]

So Jd how do you handle this?Since 90% of Fe clients are on Medicaid do you make

I don't find that to be the case at all about the 90%. Nor do I get many people that have COPD as you seem to say all of your clients do.

If someone is concerned about the cash value because of Medicaid then we make someone else the owner.