Whole Life Insurance & amp; Medicaid.

Also If she cashes it out, as she has no funeral /burial set up, she can buy and pay for an in-full preneed funeral and burial policy. Every single FH in TX will have someone on their staff to give you the details on what they offer for preneed that they do at all sorts of price ranges; & will be totally OK for how TX LTC Medicaid looks at the policy to make sure it is in compliance for TX laws.

Please pls pls be on the alert for anyone telling you about Funeral and Burial Trusts and that they can be used for a set-aside or a placing lots of $$$ that would otherwise be a required spend down. Yes they do exist but for TX you’re better off doing a preneed with a local FH imho.
Why? TX has these very very regulated, each policy has to have the insurer registered under a permit with 1. TX Dept of Banking, 2. TX Dept of Insurance and 3. TX Funeral Services Commission (and they have additional licensing requirements); 4. Goods & Services document that is quite specific and lastly 5. Residual Beneficiary Agreement, this is the one that names the State to get any $ left over from the policy should the funeral and burial not use up the entire amount.

Other States do not seem to be quite so over-reaching on these like TX.

The type of life insurance policy is what matters:
- if Whole Life, these have a cash value & has to be cashed in with the cash used towards their spend down. Which for TX is $2,000 max for nonexempt assets from ALL places (bank accounts, investments, etc).

- if Term Life*, that’s a totally different animal as it has ZERO value until the policy owner dies. It’s only after they die that it has any value. And its value reported to LTC Medicaid is whatever its FACE VALUE is. It can be a 50K policy or could be a low 1K policy, it does not matter…. It’s the face value that is reported

- if it’s a GUL*, they tend to have a cash value & be a fixed age based policy but they usually are written that the value is NOT available as it is required to plow back into the policy. If so, it takes the path of Term Life.

So it’s mucho importante to find out precisely what type it is.

* for both Term & GUL, if the policy is more higher value your State allows for life insurance, the State is going to require a change in the beneficiary. So let’s say…. MeMaw1 has a Term Life policy with a face value of 50K so it will a have an after death payout of 50K, and your State has the maximum exempt value set at 10K (10K is common as that’s kinda what you need for funeral & burial); the State will require MeMaw1 to do a change of beneficiary on that policy to now name the State to become the first/primary beneficiary and then everyone else falls to 2nd, 3rd. It’s standard stuff for insurance companies to do.
But let’s say MeMaw2 has a Term with a face value of $7500, she will not have to do a ch age of beneficiary to her Term Life policy as she’s coming in under her States max of 10K.

LSS details super important!

Medicare does not pay in anyway for Long-term care. Its health insurance.

I cashed in Moms policy and got about 10k. Took that money to the funeral director and got a Medicaid Funeral Trust. There is a limit to how much money can be put in that trust, I think.

If conservative, you maybe able to get a funeral done for 9k. You don't need the best casket because water proof vaults are used. I had one viewing, the one before the services. Have the luncheon at your home inviting a select few.

In New York if the cash value is under $1,200 it will not be considered an asset.

You might consider cremation which would be about 2,000.00.

If she is the owner of policy and becomes ward of the state, Texas guardian will still cash out the policy and use to fund her care. Unfortunately when a person gets to end of life and needs public assistance to fund custodial care, the ability to pay for a burial is frequently outside the available cash to pay for it. If you consult an attorney familiar with Medicaid there may be an option to convert to an irrevocable funeral trust or prepaid funeral as mentioned below, but it’s subject to cost limits too. That would limit who had control of the life insurance asset and change ownership. Get legal advice! A mistake can disqualify her. The sad truth of asking for public funds to pay for care is that you are subject to the rules to qualify. $9,000 in life insurance policy would help fund most of a month’s care. My husband’s mother was on Medicaid. There was no outside funeral in a private cemetery in her own plot. She was interred with her husband after cremation in a VA colombarium at the cemetery as that was what there were funds to cover. If she was a widow of veteran, the VA might cover part of the expense, just not all of it.

The policy can be cashed out now. The money from it can be used to prepay for her funeral and burial expenses. Medicaid would pay for her nursing home care

So complicated, all of this. I would get a good connection with an elder law attorney to work through.