My mother is in a nursing home. They take her monthly payment from her S.S. She is also getting Medicaid. We just found papers to a Whole Life Ins. policy she has. She wants to cash it in for Face Value. Can Medicaid or the NH take this if we were to put it in a savings account at her bank in her name? She is in sound mind, but doesn't know what to do with this money. She does want the kids to split it now. I want to do the legal thing. I am her POA of everything. Please help me here! Thank you!!
She cannot gift at all. Gifting = penalties can b placed.
Your mom is on LTC Medicaid program, so her income (that SS she gets) and her nonexempt assets (like $ in savings) have an exact $ amount maximum. The income varies by state but nonexempt assets usually 2k max. Her income is her required copay to the NH each month.
BUT she gets a PNA = personal needs allowance that is deducted from her SS$ each month. PNA varies by state, most do $50 or $60 a mo. If the NH is getting directly her SS, that PNA is building up in a in-facility trust account in her name. And you might not be actively aware of that $ that’s hers as not all NH send out a PNA statement. My moms 1st NH didn’t, but 2nd did every 90 days. You need to, again need to, pay attention to PNA $ as if she doesn’t spend it, it can build up and take her over the 2k limit.
It’s 2k nonexempt max for individual LTC Medicaid from all sources.... her savings account, her PNA, $ stashed in her purse.
But let’s step back a bit... whole life usually do not have “face value” written on the policy. Whole usually has the aggregate value stated. Face tends to be written as a sentence in term policy. Please please make sure which it is as your 1st step.
Have you ever actually spoken with the caseworker assigned to your mom? If not, I’d suggest that you plan on doing this AFTER 1. you find out exactly and clearly if it’s a whole life policy and 2. what the payout will be and 3. FH & burial estimates.
If whole life, I bet it takes 2-4 weeks to get a cash out settlement quote from insurance company & how much lead days they need to activate a pay out (this part is mucho importante). In that period of time, you shop around to FH to see what a “preneed” policy will cost. Please please make sure that the burial plot is included. Many religious cemeteries- Catholic, Jewish - run entirely separate from the FH, so find that out. Floral seem not to be included in preneed in my experience but this may be a regional thing.
You want to get all this done so that when you contact the caseworker you give them all they need to approve that type of spend. You want to try to get the actions done at the beginning of the month so that all the $ flows in & $ out before EOM. So she starts her month Ok for Medicaid and ends her month OK for Medicaid and her bank statement shows this. Otherwise It’s paperwork hell for you all and the caseworker too. So doing some sort of preclear with caseworker will keep this from becoming an issue.
Also ask CW if state has a max on preneed funeral & burial policies. Like for JoAnn, hers was 10k up in NJ; while southern states tend to have it at 7500.
And ck on her PNA at the NH to see just how much $ it has in it. Good luck & stay organized!