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It is around $10,000. I am about to place my home in a long term nursing home facility which accepts Medicaid. I have to apply for medicaid in order to pay for her room and board. I was told by a friend if I listed her life insurance policy which she has paid for many years that they will take those monies also. The policy is a little over $10,000 she receives social security from my dad and VA aid and attendance monthlly from dad.

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Psquare, that sounds like a question for an elder care attorney who practise in the state where mom retired.
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My mother has a life insurance policy in the form of a retirement benefit. Original value was equal to her last years salary prior to retirement. Value decreased 10% per year from the age of 70-75. She is 80 now and it is worth 50% of the original value and will not be reduced. Since this policy has no cash value to her, and is paid to her children at death, can Medicaid try to take it once she passes?
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Another important consideration is who the owner of the policy is. If your mother is the owner, then it is her asset. If it is an annuity, rather than term life, it will have a surrender value. If it is more than a certain amount, it will have to be reduced. If someone else owns the policy, then it is not your mother's asset. For example, if I purchased life insurance on my mother, it would be my policy and Medicaid would not consider it as an asset.
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I agree if it holds any cash value it counts to Medicaid.karenlorenzo gave great advice.
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If the life policy has no cash value, then they cannot take it, however, whole life insurance accumulates cash value so if it is over $1,500, they will use any amount in excess of the cash value reimburse expenses for your mom's care. According to infolongtermcare, medicaid has a poverty criteria eligibility and having a life insurance with cash value more than $2000 will disqualify you. What you can do is ask your mom to transfer the policy to a funeral home to pay for funeral expenses or surrender it so you can spend down the cash value, but remember to consult a lawyer before doing anything to avoid being penalized by Medicaid.
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