I previously discussed the Medicaid requirements you have to meet if your goal is to exclude a life insurance settlement contract from the nursing home Medicaid asset test. If you complete that step, the next critical step is that you have to put the proceeds from the life settlement contract into the right kind of account.
The HHSC requires these features to exclude a life insurance settlement account for nursing home Medicaid eligibility purposes:
- the account must be irrevocable,
- the account must be state or federally insured,
- the account must allow payments for long term services and support and/or medical expenses, and
- the account must indicate the total amount payable for long term services and support expenses.
If your life insurance settlement account does not meet all of the above requirements, then the HHSC will consider the proceeds from the transaction a countable resource for nursing home Medicaid eligibility. If the proceeds of the account are no longer accessible to the Medicaid applicant, then the HHSC will examine the facts to see if they can impose a Medicaid penalty.
These HHSC regulations are a reminder of the importance of knowing all of the requirements when it comes to nursing home Medicaid eligibility. If you attempted to complete this transaction on your own without a Woodlands Medicaid Attorney and without knowing these rules and made a mistake, the HHSC could have either counted the proceeds as an asset or ended up imposing a Medicaid penalty which is probably what you were trying to avoid. When it comes to nursing home Medicaid, make sure you do things right the first time if you want to save money.