“Will Medicaid take life insurance proceeds after I die?”

Will Medicaid take life insurance proceeds after I die?,” by Karin Price Mueller, NJ.com




“Q. If I have an insurance policy that has no cash value and my son is the beneficiary, when I die and he receives the money, will Medicaid file a lien on that money? Would my son have to pay it?

— Uncertain

A. Many families are surprised that Medicaid will go after funds if it pays for your care before you die. …

New Jersey Medicaid considers proceeds from term life insurance policies with no cash benefit to belong to the named beneficiaries and are not subject to estate recovery, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.”


LTC Comment, Stephen A. Moses, President, Center for Long-Term Care Reform:

Medicaid exempts term life insurance in unlimited amounts. So to get rid of a million dollars and qualify immediately for Medicaid LTC benefits, all the applicant needs to do is buy a term policy in that amount. Wait, you say. Wouldn’t the premium for such a policy be almost as much as the benefit? Why do it? This article explains the key to this Medicaid planning gimmick. As long as the beneficiary is someone other than the Medicaid recipient’s estate, such as an adult child heir, the family dodges the estate recovery requirement.