Life Insurance And Nursing Home Medicaid in Houston, Texas
When you need to create Texas nursing home Medicaid eligibility for a parent or spouse you need to go through a lot of information. This can get confusing or overwhelming at times and it’s easy to make mistakes. One of the first steps you need to complete is putting together all of the Medicaid applicant’s asset information.
It is important to include all of their assets at this stage because if you leave out an asset based on an assumption that it is not counted for nursing home Medicaid eligibility when it actually is counted, you can create a costly Medicaid mistake. One of the most common assets I see people make mistakes with is life insurance.
Does Life Insurance Count?
Sometimes it counts against the Medicaid asset limit. Sometimes it does not. You can probably see where the confusion begins.
In order to know if your parent or spouse has life insurance which pushes them over the asset limit you need to know specific details of the policy and even if the policy is proven to be exempt later on, it still has to be reported to the HHSC during the application process anyway.
Let’s take a look at how the HHSC treats a life insurance policy for nursing home Medicaid eligibility.
Rule #1 is: If the total face value of life insurance policies owned by a person (or spouse, if any) is $1,500 or less per person, HHSC does not consider as a resource the value of the life insurance.
Rule #2 is: If the total face value of all life insurance policies owned by a person, eligible spouse or ineligible spouse whose resources are deemed to the person are more than $1,500 per insured person, the cash surrender values of the policies are resources.
The Owner Matters, Not The Insured
It is important to note that these rules also include policies owned on other individuals. A policy is a resource available only to the owner of the policy, regardless of whom it insures.
What About Surrender Charges?
Surrender charges do reduce the value of the policy for eligibility purposes. They do not make the entire policy an exempt asset though.
What To Do If It Is An Asset
You have a couple options.
- You can keep the policy. This only works as long as its cash value does not push you over the resource limit.
- You can surrender the policy. This is a big decision. I wouldn’t do this without speaking to your nursing home attorney in The Woodlands first. This step will make sure you don’t miss other opportunities.
- You can explore a life settlement option. This is mostly for high value policies.
- You can leverage the life insurance for asset protection. It is worth less today than it will be in the future, Therefore, life insurance can be a great candidate for people that want to protect assets from nursing homes. This is also a tricky maneuver that you should discuss with your Houston nursing home lawyer first.