Whole Life Can Disqualify You From Medicaid Long Term Care

24 Jun 2022 · 1 min

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In this brief instructional video, Jerry Taylor explains that the cash value of a whole life insurance policy can make an applicant ineligible for Medicaid long‑term‑care benefits if the cash value exceeds the state’s allowable exemption amount. He cites examples such as Alabama’s $5,000 limit and Florida’s $1,500 limit, noting that each state sets its own threshold. When the cash value is above the exemption, the typical remedy is to surrender (cash in) the policy and use the proceeds to pay for private‑pay nursing home costs or home improvements for a surviving spouse, acknowledging that doing so eliminates any death‑benefit for beneficiaries. He contrasts this with term life insurance, which has no cash value and therefore does not affect Medicaid eligibility. The video ends with a call to follow the channel for more similar information.

Chapters

What happens to life insurance if you have to apply for Medicaid? Whole life cash value insurance can disqualify you from Medicaid benefits. So if you have a whole life policy that has a cash value above your state's exemption amount, you will be disqualified from Medicaid benefits. In Alabama, that amount's $5,000. In Florida, I think it's $1,500. So it varies from state to state. So if you're above that, what do you do? What most people do is cash it in. And they spend the money on private pay in the nursing home, or if they still have a spouse in a home, they use it for improvements at the home. If you have a term life policy, it will not disqualify you from Medicaid benefits. Of course, if you decide to cash in the policy to spend down the money, that means that no one will get a death benefit when you pass away. Follow this channel and I'll give you more information just like this.