Can a POA deposit life insurance benefits into an account for surviving spouse?

Medicaid will find out about that money, it should be reported to avoid grandma being cancelled from Medicaid for non compliance or worse fraud. If they determine fraud was committed they usually require a repayment of all monies paid on her behalf.

I think that you know the answer and are looking for a work around. Beware defrauding the federal government, they are nasty when people cheat.

Talk to her Medicaid representative and find out what can be done legally and above board.

I would say no. Medicaid should be told. You could prepay Gmas funeral and which would include the cost of a stone, flowers and I think the luncheon. But Gpa may not have a stone until Gma dies when they both can have their names put on it. Gma is allowed 2k in an acct (some states maybe more) Anything over that, will need to be used for Gmas care. Meaning Medicaid will stop until the money is spent down then reapply for Medicaid.

It has to be reported to Medicaid.

This money must be reported to Medicaid.  For them to be paying for her care, she has stated she has no money.  If she gets a payout, it must go to them.  If it doesn't, the parties involved can be prosecuted for fraud.  If she has the ability to provide for herself, even through a life insurance policy, she needs to report this.  Taxpayers are supporting her, if she gets a pay out, it must be reported and turned over.  I see where you are coming from, but at the same time...you need to report the income.

Has the life insurance money been reported to MEDICAID? Because it’s medicaid that is paying for your grandmothers nursing home, not Medicare. Medicaid is income based so that money must be reported to them. It doesn’t mater who’s name is on the account.

I presume your sister is your Grandmother's POA. If she was your Grandfather's POA, that ended when he died & unless your sister was named Executor of his estate she has nothing more to do with his finances. However, if she was named POA for both your Grandfather & your Grandmother, that's a different kettle of fish.

Technically, you (actually your sister [she]) might want to consult a lawyer.

Whatever the case, the money is legally your Grandmother's, which means Medicaid can take it if they find out about it.

If your sister is your Grandmother's POA, then I supposed she can do what you are describing what the actual legal ramifications are if Medicaid were to find out about the money is an unknown that I personally would not want to have to deal with.

I do know that someone in your grandmother's situation is allowed to convert a life insurance policy into a prepaid funeral plan - whether that includes a headstone or not, I don't really know. And whether that is something that can be done after she has been on Medicaid, I can't say. It's a bit of a sticky situation.

I'd be tempted to tell your sister not to cash the check but go ahead & use it for what she's wanting to do & sign the check over as payment for the prepaid funeral & headstone.

Please tell your sister to make absolutely certain she thoroughly understands what the prepaid funeral she chooses will be providing & that it will be provided for the amount paid & will not charge any more. That means the headstone AND having it carved with whatever is to be put on it. If purchased & set up ahead of time MAKE CERTAIN THE COST OF ANY ADDITIONAL CARVING IS INCLUDED.

Are you referring to Medicaid?  And POA for an individual ends at that person's death.