Whole life insurance and MA

Question

I am a beneficiary of a whole life insurance policy. Can Medical Assistance or Medicaid take the funds? I am in Minnesota.

Answer 1

Disclaimer: I am not an attorney but know enough to say that you should speak to an attorney before doing anything, as hiding assets from Medicaid can cause serious problems, even if there was no intent to defraud.

However, from https://www.elderlawanswers.com/can-life-insurance-affect-your-medicaid-eligibility-12421:

If a Medicaid applicant has term life insurance, it doesn’t count as an asset and won't affect Medicaid eligibility because this form of life insurance does not have an accumulated cash value. On the other hand, whole life insurance accumulates a cash value that the owner can access, so it can be counted as an asset.

That said, Medicaid law exempts small whole life insurance policies from the calculation of assets. If the policy's face value is less than $1,500, then it won't count as an asset for Medicaid eligibility purposes. However, if the policy’s face value is more than $1,500, the cash surrender value becomes an available asset.

So it may depend on whether you have access to the funds directly or if you are just the beneficiary on death (meaning whoever set up the policy owns the cash value, not you)

The site also gives some possible solutions, but also warns to speak with an attorney, for the same reasons.