Single Premium Whole Life & Medicaid Qualification

[wehotex]

From my understanding, SPWL is a way to pay a large lump sum up front (at least $25,000) that earns little to no cash value. Is this a legitimate way to "hide" assets so that he/she can qualify for medicaid?
I know a senior who has about $38,000 in savings, but receives only about $650/mo from social security. If not for her ample nest egg, she could qualify for medicaid. If she were to purchase a SPWL, how does medicaid look at this?

 

[Newby]

From my understanding, SPWL is a way to pay a large lump sum up front (at least $25,000) that earns little to no cash value. Is this a legitimate way to "hide" assets so that he/she can qualify for medicaid?
I know a senior who has about $38,000 in savings, but receives only about $650/mo from social security. If not for her ample nest egg, she could qualify for medicaid. If she were to purchase a SPWL, how does medicaid look at this?

There is no legit way to "hide" asserts from Medicaid unless you can wait 5 years to apply for Medicaid.

In order to qualify for Medicaid she would have to list her estate as the beneficiary. And the life insurance benefit upon her death would go to Medicaid.

 

[billyg]

From my understanding, SPWL is a way to pay a large lump sum up front (at least $25,000) that earns little to no cash value. Is this a legitimate way to "hide" assets so that he/she can qualify for medicaid?
I know a senior who has about $38,000 in savings, but receives only about $650/mo from social security. If not for her ample nest egg, she could qualify for medicaid. If she were to purchase a SPWL, how does medicaid look at this?

What Newby said. However, If she has a real need to cover funeral expenses, she can set up a Funeral trust to ensure that some of that money (most state have limits that don't go over 15K) is available to pay for the funeral. I think Settlers and NGL have options here.

 

[Todd King]

From my understanding, SPWL is a way to pay a large lump sum up front (at least $25,000) that earns little to no cash value. Is this a legitimate way to "hide" assets so that he/she can qualify for medicaid?
I know a senior who has about $38,000 in savings, but receives only about $650/mo from social security. If not for her ample nest egg, she could qualify for medicaid. If she were to purchase a SPWL, how does medicaid look at this?

This would work if the client wasn't the owner/payor. That's the only way I could think of for a SPWL policy.

 

[Newby]

This would work if the client wasn't the owner/payor. That's the only way I could think of for a SPWL policy.

If it's a single premium and the money comes out of the person going on Medicaid's money...it will be recovered by Medicaid regardless of who the owner payer is.

You can't give away assets within 5 years of applying for Medicaid.

A man in Kentucky called me last year who had been advised by an attorney and a financial advisor that since his mom was in a nursing home and would end up on Medicaid that he should set up single pay irrevocable funeral trusts on his mother, himself, his wife and several siblings for $15,000 each.

It took about two years but Kentucky Medicaid caught up with it and required the man to pay back all but the one on the mother. He couldn't get to the funds because they were irrevocable (as far as the insurance was concerned) so he had to pull that much out of his own IRAs plus pay taxes and penalties to avoid a lawsuit.

Medicaid is way underfunded. It HAS to tighten up on people who want to "game" the system.

 

[Todd King]

Yes, agreed. That's what I was trying to say when I said the Medicaid recipient can't be the payor or owner.

 

[Franz Kafka]

In order to qualify for Medicaid she would have to list her estate as the beneficiary. And the life insurance benefit upon her death would go to Medicaid.

Do you know if they require change of beneficiary on existing life policies? In CA all existing life policies are exempt from asset calculation so it would make sense for them to require that (for postmortem recovery).

 

[WinoBlues]

As I am reading this thread I get a call from a client's son. They are in the state of Idaho. He is being told by medicaid that he needs to do a Funeral trust naming a funeral home as bene for the goods and services and medicaid as contingent. He says that the funeral home is telling him all he needs to do is an Irrevocable ownership and Bene change. Pretty much I parroted back what Newby said. But told him I was not an Elder Attorney and he should call one.
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Do you know if they require change of beneficiary on existing life policies? In CA all existing life policies are exempt from asset calculation so it would make sense for them to require that (for postmortem recovery).

CA _may_ be different. I have gotten many calls from family members saying that the case worker told them to change the ownership before applying. Seems that the look back would get them.

 

[Newby]

Do you know if they require change of beneficiary on existing life policies? In CA all existing life policies are exempt from asset calculation so it would make sense for them to require that (for postmortem recovery).

The states I'm familiar with require cash value policies to be changed over where the estate is the beneficiary.

Term life insurance is generally exempt because it's not a countable asset.

 

[WinoBlues]

The states I'm familiar with require cash value policies to be changed over where the estate is the beneficiary.

Term life insurance is generally exempt because it's not a countable asset.

Would that include the new GULs that do not illustrate cash values?