My Mom has an insurance policy that has been self-paying with the cash value since June 2010. I recently received a notice indicating that the cash value has been exhausted as of June 2012. This is the situation; my Mom has been in assisted living since 2008 and has Medicaid assistance for several years now. As I’m sure you well know, she has an allowance of $100.00 per month on Medicaid. My question is… If I personally pay this premium for her to continue the policy, when she passes, the beneficiaries of said policy paid or can Medicaid go to the insurance company to seek repayment? Any assistance/guidance in this matter would be greatly appreciated.Dawn Jones
Country relating to Question: United States
State (if USA): New Jersey
I have contacted the insurance company's legal department, still waiting for an answer.
Thank you for your question and for using JA. Please click accept so I will receive credit from JA for my time.It does not matter who pays as long as the premiums are paid. The beneficiaries will receive the proceeds and they are not subject to the Medicaid estate recovery since the money will pass outside of the probate process.
Since this has been self paying since she began Medicaid and my mom pays the premium, will Medicaid increase her monthly allowance or will this now be considered an asset?
A whole life policy has a “face value”- the original amount of the policy, a “cash value”- the amount accumulated in the “savings” portion of the policy and a “death value”- the face value plus accumulated cash. The death value is the amount the policy will pay out at death. The cash value is what the insurance company would pay if you canceled the policy today. The cash value of any whole life policy is countable. Thus, a policy with a face value of $5,000 and a cash value of $3,500 would disqualify an applicant from receiving Medicaid since the cash value is more than $2,000 maximum limit. You will just need to be careful that the cash value does not reach the $2,000.
Actively practicing trial attorney
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