sumlerc Posted September 2010
Medicaid and Retirement pension
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Thank you so very much for your help.
Texas has a very high minimum monthly maintenance allowance for the Community Spouse (CS). The CS, in this case your dad, is permitted to maintain a minimum monthly income of $2,739 in 2010. This means that if his income is below $2,739 he is entitled to receive your mother's income (including Social Security) to meet that monthly income. Essentially, the state will gave dad mom's Social Security to meet his needs and makes up the difference with the nursing home. Caveat: You have to ask for this income diversion when you apply!
Sorry but I made an error above with respect to the amount can be dedicated to "Burial Accounts". In Texas the allowed amount is $1,500. This must be coordinated with Irrevocable Funeral Arrangements if that will be part of the plan. A knowledgeable funeral director should know the rules. If not, go here and scroll down to "life insurance": http://www.dads.state.tx.us/handbooks/mepd/F/index.htm
http://www.dads.state.tx.us/
1. If mom is the only person applying for Medicaid, Community Spouse (CS) Impoverishment rules will apply. This means that Medicaid will look at the income and assets of the applicant and the spouse separately.
2. The spouse applying for Medicaid cannot have assets of over $2,000 nor income over $2,022 per month. The CS may retain all of the couple's assets above $2,000 up to $21,912 and one half the amount up to $109,560 in 2010.
3. Assets owned by the applicant spouse valued over $2,000 can be transferred to the CS without penalty.
4. If husband is owner of the policies and mom is going to apply for Medicaid, no problem.
5. If mom owns or is co-owner of the policies she can transfer ownership to her husband with no penalty.
6. Problem solved (for the near term, anyway).
IMPORTANT NOTE: If these policies are kept make sure that no one who is receiving Medicaid is a beneficiary!
Given the numbers you supplied, it may very well be that these policies will sustain themselves without further premium payment if dividends are directed to premium payment. Contact the respective insurance companies and ask for an "in force ledger" without further premium payments and dividends going to premium. That will show you how long the policies will last and what the benefits will be.
If you want dad to apply for Medicaid, too, then the policies will most likely have to be surrendered. Unless....
Do your parents have final expense plans in place? If not, or if the plans are inadequate for today's market, you could transfer the policies to an irrevocable funeral trust to pay for final expenses. Any funeral home should be able to help you with this transaction. The policies will then be exempt from Medicaid countability.
OR, you could cash the policies, have mom retain $2,000, have Dad retain $1,000 (or vice versa) and you can then open a $2,500 "burial account" at a bank for each of them. This should be a non-interest bearing account titled "Jane Doe Burial Account". You have now protected $8,000 worth of assets.
Of course, if you feel the cash would be more helpful right now, then by all means surrender the policies and take care of business.
Just remember....DOCUMENT ALL TRANSACTIONS.
Can the ins policies be cashed in and the money given to the nursing home so they can qualify for Medicaid? I'm really scared for my mom, she's home alone and we all will feel much more secure with her being in a nursing home with dad. I'm not trying to shirk my responsibilities, I'm trying to maintain a good quality of life for everyone concerned.
I truly appreciate your help...it is so dis-heartening that their meager earnings and life insurance can prohibit them from receiving the long term care they desperately need at the age of 86 and 95!
We live in the state of Texas, there are 2 ins policies with death benefits of $3,000.00 each and cash values of $1,500.00 each. They have another ins policy with a death benefit of $5,000.00. I am now afraid that I have over stepped in taking the initiative of paying up their policies for 6 mos.
They have an outstanding c.c balance of $6,000.00 on one cc and 1,500.00 on another c.c.
Because of the recent sale of their car, we have been replacing much needed items for them, however we're having a dickens of a time maintaining a balance at or below $3,000.00
My mom really wants and needs the care of a nursing home but I fear she may now be denied because of "too much" ins.
I thank you in advance for your kind guidance.
However, life insurance policies may be considered a "countable asset" for Medicaid eligibility purposes.
If the total face value (in other words death benefit) of all policies owned is less than or equal to $2,500 then the cash value of the total of all policies is excluded. If the total death benefit of all policies exceeds $2,500 then the cash value of all policies is included in determining the asset test.
If both parents are receiving Medicaid benefits most states permit the couple to have only $3,000 in assets. The life insurance cash values, if countable, can be included in this number. If the cash values are higher than the $3,000, then they will have to be disposed of to the extent that they are "over-resourced".
I can appreciate wanting to maintain the policies but you may have no choice but to surrender them for cash. If you do this, I would suggest looking at a method to preserve the cash for their use while applying for and receiving Medicaid. Specifically, consider the use of a Personal Service Contract or Agreement or Supplemental Needs Trust. Of course, the cost involved in establishing these arrangements may not be worth the result.
Let me know what state you are in, the cash surrender value of the policies, the death benefit of the policies, and any outstanding loans, and perhaps I can guide you further.
You really need to make sure you have this straight before you apply. Applications are denied because of life insurance policies not being reported correctly as an asset.
Thank you!
For my mother all available monies (SS AND retirement) were garnished.
I am not about insurance policies, so talking to a lawyer is best. perhaps one of the legal (staff) experts will have more information and post soon.