Life Insurance and Medicaid

We’re an elder law firm that helps with traditional planning as well as crisis planning, and many of us need benefit programs to get through that. And the main program that we use for long-term care is Medicaid. Medicaid helps when you are at a certain resource level to help cover that cost of care. There are ways to prevent having to spend all the way down to nothing before Medicaid is available, but we have to have you down to certain resource levels. So planning is important.

Part of that plan that’s overlooked is life insurance. Life insurance is considered a resource, even though we don’t really consider it that because there’s no value to it until we pass away in many cases. So if you have what we call traditional term life insurance, there’s no cash value, then that can be exempt. It’s not considered a resource. But if you have whole life, universal life, one of those type of policies that has a cash value, you have to be careful because the cash value is considered a resource. So we’ve had situations where folks say, “Well, the cash value is $20,000. The debt benefits, $40,000.” Well, Ohio would want you to liquidate that policy, complete the cash value, and lose to the death benefit. So that is something when we’re pre-planning, we look at very closely to try and protect or preserve, but it is considered a resource. So make sure your advisors are aware of that.