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If I change my permanent life insurance contract with cash…

If I change my...

If I change my permanent life insurance contract with cash value to either a paid up extended term contract or a reduced paid up contract using the cash value - would this contract be exempt from Medicaid eligibility?

Lawyer's Assistant: What state are you in? It matters because laws vary by location.

New York. Thank you. I know we can maintain term insurance and have a permanent contract of not more than $1,500.

Lawyer's Assistant: What steps have you taken so far?

None. Basis research.

Lawyer's Assistant: Anything else you want the lawyer to know before I connect you?

I really didn't want to speak with anyone - just need to know if I can change my insurance contract to preserve the benefits and not have the contract subject to Medicaid. Thank you.

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Answered in 42 minutes by:
11/6/2017
Law Educator, Esq.
Category: Legal
Satisfied Customers: 124,312
Experience: JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
Verified

Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.

As long as your insurance policy has NO CASH VALUE, the policy is not counted by medicaid as long as the switch is not made during the 60 month lookback period. So, if you want to turn your cash value policy into a term policy, as long as it is not done in the 60 month lookback time, you would be allowed to do so.

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Customer reply replied 6 months ago
Why is the 60 month time period relevant? I’m not gifting the insurance merely recharacterizing it. I continue to maintain ownership. If I put $100k into my home and my spouse continues to live in the house, this gift is exempt. If I take the Insurance cash value and exercise a provision under the contract, why isn’t This contract exempt regardless of the time frame? Thank you.

Thank you for your reply.

It is because you are disposing of cash assets that the 60 month requirement applies. So since you are disposing of cash value in your insurance to a non-cash value for the purpose of qualifying for benefits they do apply the 60 month.

You are comparing your spousal gift to insurance, two different things. Why isn't the contract exempt, because there is nothing in the law making it exempt I am afraid. Medicaid says if you transfer a cash value insurance asset into a non-cash value insurance asset they look at it as disposal of assets to qualify. You giving your spouse a house to live in is not the same since there are spousal protection rights provided for.

Law Educator, Esq.
Category: Legal
Satisfied Customers: 124,312
Experience: JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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