It's different from state to state but in MOST states in order to qualify for full Medicaid he will need to disclose ALL life insurance policies. They will generally have to be irrevocably assigned to a funeral home. There can only be ONE beneficiary after the funeral home and the one beneficiary HAS to be the estate. Everything that runs through the estate goes to Medicaid.
The 5-year look back has to be before he applies for Medicaid. He would have to have irrevocably assigned the policy to a trust 5- years before qualifying for Medicaid.
One work around is his family members can buy life insurance on him if he never owns the policy. Medicaid can't count his kids assets as his spend down money. You can't change an existing policy over to his kids but they can buy a brand new one.
Yes, funeral homes do sell Preneed funeral insurance. The Medicaid office, his attorney and the funeral home will all likely advise him to do that and not buy other life insurance. In fact they usually recommend that people cash in their existing life insurance when they go on Medicaid.
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Originally Posted by sissymary
The 8 grand limit the funeral dir is talking about is probably the limit in your state for a funeral trust. You see, if he were to go into a nursing home that medicaid pays for, anything above the 8 grand they will keep if he has a funeral trust. If he does not go into a nursing home he has nothing to worry about, as they won't/can't take anything from what I understand. Just make sure he does not put ESTATE as his benny. Make sure it's a person. Also medicaid has a 5 year look back period, so if he lives past that all should be fine on everything. I would Google funeral trust to learn more. And yes the funeral dir is trying to sell him a policy or a single premium policy set up as a funeral trust with him self as the benny.
8 grand is the amount of the funeral not the state limit for funeral trusts. Most states allow $15,000
A nursing home has no bearing on what happens. If he's on full Medicaid (which most people in nursing homes are but also people at home can be) he will have to comply with Medicaid's asset limits.
He is REQUIRED to list the estate as the only beneficiary in most states. This is how Medicaid recovers their money from excess life insurance. He can't name a person. It would result in getting disqualified from Medicaid assistance.
The 5-year lookback will only help if he assigned ownership of the policy to an irrevocable trust 5-years BEFORE qualifying for Medicaid. It doesn't matter how long he lives. If he assigns it today and lives 10-years the money is not protected because you can't give away assets after you go on Medicaid (or even the 5-years leading up to it.)
Googling funeral trust will get you some info but also a LOT of websites selling the NGL type funeral trusts with no clue what they are doing.
The funeral trust will be exempt with NO lookback but any amount overfunded (not spent on the funeral) MUST go to Medicaid.