Can the nursing home take Dad's insurance policy?

Kallen's question shows us the many different categories of assets that are listed in every Medicaid application. In my state (Massachusetts) the Medicaid agency grants a free pass to 1 life insurance policy if it has a Cash Surrender Value under $1,500. You can Google the regulations for Kallen's state (North Carolina) and find that her state may be more generous with cash surrender value.

If the life insurance policy doesn't have a cash surrender value ((some policies that were provided and paid up by employers before the person retired don't have C S V)) then it is not even counted against you. Term life insurance may not have a cash surrender value, but then how will you keep paying premiums to keep the policy in force if your income is taken to cover the nursing home patient paid amount?

In my state (Massachusetts) there are several ways the cash surrender value can be reduced to bring the policy into compliance.

Also, if there is a spouse living at home, a life insurance policy could be included in the asset allowance for the spouse ((called the Community Spouse Resource Allowance in my state, Community Spouse Resource Protection in some other states)).

There's so much to consider when applying, it is usually a positive cost-benefit decision to hire help with the application and asset planning.

Nursing homes costs about $70,000 to $80,000 a year to care for a single patient every year (not a private room either). Despite the high amount, many receive very poor care, prone to infection from the other inmates, and abuse. My understanding of medicaid is that they seize the entire family estate (except the home, which they can get after the person dies)--in my State you have to "spend down" for the cost of his care to some ridiculously low amount of money -- you are only allowed to spend it on the cost of his care, or invest in home repairs/rennovations, funeral costs, and or a buy a new car (which most likely he won't be able to drive). They have a five year look back law, so you can't transfer the estate monies to your account without Medicaid penalizing (they will not allow the person into a nursing home until that amount is used up equivalent to being in a nursing home, something like that--it's horribly complicated). Medicare will NOT pay for long term care -- the person has to be in the hospital for 3 days, and Medicare will only pay for 100 days in a nursing home for rehab. Anyway, once the money is "spent down" (and PLEASE see an eldercare attorney about this because it has to be done right), he will be eligible for Medicaid. The nursing home will seize his entire income for cost of his care. This does not relieve the stress for caregivers, however. You MUST visit very frequently - even daily - otherwise your loved one will be more prone to abuse and neglect. $3,500 a month you should be able to very nice assisted living facility. If he's ABLE, I would check into assisted living and try to stay off of Medicaid like the plague.

Please contact an eldercare attorney. Medicaid has no interest in impoverished the spouse who still lives in the community. You are able to keep something around 100,000 as the community spouse. Find a lawyer who will do a free half hour consult and see if you find his advice worthwhile to invest in

If it is term life with no cash value there is no reason to take it from him. It is not the NH that takes it, it would be NC Medicaid rules. Read the policy and see what type it is.

Check w/ NC SHIP office. www.seniorsresourceguide.com/directories/National/SHIP/
If his pension and social security cover the cost of care, his life insurance will be payable as written. If the $3500/mo is all he has and that is not enough for the cost of care and Medicaid pays even a fraction of his costs, there could be a lien at death to recover that cost to the state. Could he stay in a board and care? The lower cost could maybe be covered by his pension.

THERE IS A SOLUTION: that eliminates the situation of Medicaid Penalty, Medicaid Denial, or Medicaid Recovery due to having a life insurance policy.

This is very tied to the ongoing discussion here.

ANY life insurance policy providing it has not lapsed, (even term, group, whole, or universal), can be converted into payments to the Assisted Living, or Nursing Home, (Care provider), and is considered A VALID MEDICAID Spend down! (If the FACE Value is over $50,000 it can be considered)!

Avoid letting the policy lapse because the family or the owner cannot afford to pay for the policy, and care at the same time. Don't waste that 'investment' because you think Medicaid will take it after death. If you do the Insurance company is the only benefiting party

Also policies with a cash value can be converted to a FUNERAL TRUST, (another MEDICAID APPROVED spend down), even towards family members!

The trust proceeds are then portable, and are not designated to any particular funeral home, (portable to any location)!, not committed or tied to that funeral home. and the funeral home IS NOT the beneficiiary

A person facing immediate Nursing home needs, (or the POA, power of attorney) yet having (for example) $80,000 can obtain $10,000 (each) , a Funeral trust for self & spouse, and children.

Therefore in contrast to paying it all ($80,000), to the nursing home, can immediately apply for Medicaid.

It may be advisable to search for a Nursing home that accepts both private pay AND Medicaid to preserve 'choice options', enter the nursing home as private pay for one or two months, and convert to Medicaid.
In the above example we reserved perhaps $10,000 to $20, for Nursing home payments and $60,000 was devoted to 6 individual Funeral trusts, NOT obtained through the funeral home.

Research, research, research, and then read the Medicaid rules in your state. All states have the ability to make alterations. For example, in CA, they have Medi-Cal and its not exactly the same as Medi-Caid! Each county also has different approaches. But its extremely important to understand the rules that you are being subjected to because you have to follow them for spend-down, asset protection, spousal protection, and last but most importantly, the protection of your loved one.

All wonderful suggestions so far, elder law attorney is the place to start. Also is 24-hour care at home an option. NH are wonderful places, but the staffing ratios are difficult.
Contact or look up http://www.lifecarefunding.com they can convert life insurance equity to dollars to be used for care. That said still an elder law attorney to make sure that is the prudent thing to do.
Also if he is a veteran, might be beneficial to investigate the aid and attendance benefit.
All of this stems on the level of care needed and is a nursing home the only option. Sometimes the classic definition of nursing home is not what he needs. Assisted living communities can offer varying levels of care as his needs change.
Good luck.

In Iowa, you are not allowed to have a whole life policy unless you have turned it over to a funeral home. Otherwise you have to cash it in and use it towards your spenddown. You are only allowed $2,000 in resources. You go over that, and you no longer qualify for medicaid. There is no allowance for life insurance unless it is a term policy.

Estate Recovery
When a Medicaid recipient receiving any of the above long-term care services dies, Medicaid seeks to recover certain expenses. There will be a claim filed against the estate. Under certain circumstances, estate recovery may not apply. Your local County Department of Social Services (DSS) can provide more detail information.