Nursing Home

[Arthur Rudnick]

previously posted by rousemark

Sell non par and you won't have to worry about it...

That only addresses the income issue, not the larger cash-value issue

 

[Newby]

previously posted by Newby




I'm not sure if that 100% correct.

Agreed that the cash value is considered an asset and if the policy is surrendered, that cash value is subject to Medicaid spend-down. However, wouldn't assigning the ownership of the policy to the funeral home (or any other party) constitute an illegal transfer of countable assets and be subject to the look-back period?

No. There is no look back at all when it's assigned to the funeral home. But the beneficiary must be the funeral home "as interests may appear" and the secondary beneficiary is the estate. As you know, Medicaid is first in line to get assets that run through the estate.

Usually these are small policies. The few people in that situation that have large whole-life policies are more likely to have an estate planning attorney involved years in advance.

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so if they have a nice size policy and are receiving any kind of dividends then it is subject to be used by the nursing facility as income from that individual am I understanding this correctly? One of their alternatives is to assign ownership to a funeral home? So any dividends that were to be received would then go to the funeral home? I don't know if I like that answer! What about the beneficiaries? Since the ownership changed, then the beneficiaries would change and the only thing that would be constant would be the person that is being insured. Right?

You can not be collecting state assistance (Medicaid) and be giving money to your family at the same time. At least not without planning it 5-years in advance.

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previously posted by WinoBlues



First of all, if a WL policy is earning dividends, those dividends are usually left in the policy for additional paid-up insurance. So, the chances are the policyholder would not physically receive those dividends. However, if there's a Medicaid situation involved, those dividends are now considered as countable income and would have to be spent-down towards the cost of care.

second point:
In the case of making the FH an owner. Why would you do that? If anything, you would make the FH a beneficiary. And, you would leave the FH only enough money to cover the cost of the funeral. If the policy has a $100,000 death benefit and the cost of the funeral is $10,000, the other $90,000 should be left to someone else.

But, we're discussing cash-value and whatever that amount is (obviously less than the death benefit) that amount is considered a countable asset.
The cash value, according to Medicaid, must be spent down prior to Medicaid Qualification, it is not given to Social Security (as you stated) and it's not given to Mediciad either. It's given (in this case to the policyholder) and is considered a countable asset.

I'm not certain who the OP is and what his/her part in this and why the question was generated in the first place?

There are differences in the states but in the states I work, the policy must be fully in the funeral home's ownership to be exempt from Medicaid. The funeral amount gets paid and any remainder HAS to go to the estate not to beneficiaries. Medicaid will usually get the estate.

I don't know of any state that can still have a funeral trust with any beneficiary other than the estate. If you have 5-years to plan ahead you can make a regular irrevocable trust and name secondary beneficiaries. But not last minute planning.

 

[Arthur Rudnick]

previously posted by Newby

Usually these are small policies. The few people in that situation that have large whole-life policies are more likely to have an estate planning attorney involved years in advance.

Yes, it's most likely a small policy, probably FE. In that case the dividends don't amount to much anyway.

previously posted by dobi

so if they have a nice size policy and are receiving any kind of dividends then it is subject to be used by the nursing facility as income from that individual am I understanding this correctly? One of their alternatives is to assign ownership to a funeral home? So any dividends that were to be received would then go to the funeral home? I don't know if I like that answer! What about the beneficiaries? Since the ownership changed, then the beneficiaries would change and the only thing that would be constant would be the person that is being insured. Right?

I missed dobi's 2nd post, which leads me to believe that he's really a 3rd party to this and doesn't understand life insurance and/or Medicaid. He refers to a "nice size policy" Not sure what that means.

 

[dobi]

The question was asked by a friend and I didn't ask what size of policy it was just assumed it must of a decent amount of coverage of they were worried about losing the dividends to the nursing home. And yes, I am very new to life and Medicare insurance! My focus was major medical until this year and decided that I had had enough of Obama's mess.

 

[Arthur Rudnick]

previously posted by dobi

The question was asked by a friend and I didn't ask what size of policy it was just assumed it must of a decent amount of coverage, they were worried about losing the dividends to the nursing home.

As explained, the dividends do not go to the nursing home. Dividends are considered income and income is used by the policyholder to pay for his/her care.

If this is final expense policy, the death benefit is most likely less tha $15,000. A policy that small would generate minimal dividends. If it's a large policy, then your friend needs an elder law attorney.

 

[dobi]

thanks for all of the replies! I appreciate the vast amount of knowledge on this forum!

 

[WinoBlues]

thanks for all of the replies! I appreciate the vast amount of knowledge on this forum!

Funny thing is you got similar replies, but they all sounded different.