Life Insurance and Medicaid Planning: What You Need to Know

If you or a loved one are faced with a nursing home stay or another unexpected medical emergency, you may suddenly find yourself in a tough financial situation. Luckily, in the state of Missouri, Nursing Home Medicaid and other Medicaid programs are available to help you protect your assets and prevent you from quickly running through your savings. Because qualifying for assistance can be tricky, though, proper Medicaid planning is necessary to ensure that you receive the coverage you need. This is especially the case with life insurance policies, with different types of life insurance affecting your asset limit in different ways.

Your Assets and Medicaid Qualification

Qualifying for Medicaid is based on the amount and type of assets. These assets may include cash, property, retirement funds, and life insurance. But not every one of your assets goes towards determining your Medicaid qualification. Knowing which assets are included and which are excluded is the first step towards readying your estate for a Medicaid application.

In order to qualify for Medicaid in the state of Missouri, an applicant must have less than $5,000 of available assets. If the person is married, their spouse is allowed up to $137,400 of additional assets. Generally speaking, assets that count toward Medicaid qualification include the following:

• Checking, savings, and brokerage accounts
• Stocks, bonds, and savings bonds
• Your primary residence if you don’t intend to return home. If you do plan on returning and your home’s equity is $636,000 or less, it is an excluded asset.
• Other real estate
• Retirement funds, with some exceptions
• Vehicles other than one excluded vehicle
• Some annuities

In general, the following assets are excluded from consideration when it comes to determining Medicaid eligibility:

• Your primary residence if you intend to return home and its equity is less than $636,000
• One vehicle
• One burial plot per family member
• Irrevocable burial contracts

Life Insurance

In addition to the assets listed above, life insurance policies may count as available assets. The type of life insurance you have will determine whether or not they count.

In many cases, the cash value of a life insurance policy counts as an available asset. Not all life insurance policies, however, contain a cash value. For example, term life insurance, a cheaper option with a specific end date, has no cash value and is thus excluded. For other types of life insurance, the face value of the policy determines whether or not the policy counts as an available asset. Face value is generally the amount of the death benefit listed on the original policy, although this can change. Cash value is the amount the owner would receive if they cashed in the policy. If the face value of all a person’s insurance policies (excluding those with no cash value) is less than $1,500, then they are an excluded asset. If it is greater than $1,500, then the cash value of those policies is counted towards the Medicaid qualification asset limit.

Finding an Experienced Elder Law Attorney

Nursing Home Medicaid can mean the difference between losing all your savings and holding onto your assets. Qualifying for Medicaid, however, can be tricky, which is why it’s important to have an experienced elder law attorney on your side.

Contact The Law Firm of Christopher W. Dumm

At the Law Firm of Christopher W. Dumm, we have many years of experience helping people qualify for Medicaid. Give us a call today at 417-623-2062 or fill out the form below and we will ensure that your hard-earned assets remain safely protected.