My mother was denied medicaid in Texas due to her life insurance policy accumulating some money that would put her over resources to get the medicaid help she needs to stay in the nursing home. I was asked by the nursing home to make the policy irrevocable and I have done that, but was told that does not change ownership of the policy and the money will still be there. My mother came into the nursing home as a medicaid-pending patient in September 2015. Has anyone experienced this? The nursing home should have told me to change ownership of the policy.
( However it involves Working with a policy having a death benefit of at least $50,000)
Usually an Insurance company will offer LESS value in the policy than a conversion, The insurance company may tell you it is "not convertible" That may be a play on words as they refer to it as if you were going to "convert to something in their product line", but they do not offer it!
Often folks let a policy lapse, and "waste" the value, that is the best scenario for the insurer as they collected but never had to pay...
By "converting" the policy is taken over by the "new funder" and the current value of the policy is then converted into a monthly LTC benefit payable directly to the provider of care, no further payments by the insured are required.
As a result the outcome is TAX Free, and is MEDICAID APPROVED, a portion of the policy proceeds are set aside for final expense as well
I can be messaged privately if you need some help,
They money can also be used for your Mother's benefit. She can spend the money on things for herself. Consult and Estate Planning Attorney to help.
Good Luck
Anyway, it's true that the cash value belongs to Medicaid. That money is counted as assets. I'm sure that there are ways to plan around this with an attorney but I think that it is too late to do it now.
Take care,
Carol
Grace + Peace,
Bob