I have researched this issue in the United States Code and the Code of Federal Regulations, and I have found nothing on point. I have also searched cases nationwide to see if this issue has been litigated.
The applicable statute (42 U.S.C. § 1396a) states "that the State or local agency administering such plan will take all reasonable measures to ascertain the legal liability of third parties (including health insurers, self-insured plans, group health plans (as defined in section 1167(1) of Title 29), service benefit plans, managed care organizations, pharmacy benefit managers, or other parties that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service) to pay for care and services available under the plan, including-- . . . ."
I do not see that life insurance, for which another person is the beneficiary, falls into these categories.
My impression would be that if you were the beneficiary (i.e. the Estate was not the beneficiary), that Medicaid does not have a right to the money. I would suggest, however, that you ask them to provide you with any legal authority supporting their position (e.g. federal statute or rule, or Ohio law).
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