When we interview clients at the Law Offices of Michael J. Young, www.WalnutCreekElderLaw.com, regarding Medi-Cal qualification, we always ask if the Medi-Cal applicant owns any life insurance policies. For Medi-Cal qualification, the applicant can own any amount of term life insurance. As a result, term life insurance is an excluded asset for qualification. However, if the applicant owns whole life insurance, the face value cannot exceed $1500. The face value is also sometimes called “combined death benefit.” At times, it is difficult to ascertain the type of policy the applicant owns, and what the face value or “cash in value” is. VA policies, for instance, can present problems because the veteran, who is also a Medi-Cal applicant, may have forgotten that he even owns a VA life insurance policy. When it is discovered, and if the cash in value is over $1500, the applicant will be disqualified from receiving Medi-Cal benefits.
There are remedies to fix the problem, such as cashing in the policy, borrowing against it, and gifting or transferring ownership. If the applicant has lost mental capacity to do these things, we will need to rely on the powers in his financial durable power of attorney. Gifting or transferring ownership of the policy may not be an option for the applicant who has lost mental capacity, if the durable power of attorney does not contain the appropriate “elder law” asset protection and gifting language. Most financial durable powers of attorney do not have this special language. You should see your elder law attorney to pre-plan for these issues.
It is also a good idea to discover whether the Medi-Cal applicant is the beneficiary of any life insurance policies, such as from a spouse. If the well spouse dies first and the Medi-Cal applicant receives the proceeds from the policy, the applicant could immediately lose eligibility.
This blog is for informational purposes only and is not legal advice. Please see an elder law attorney for your particular case.
Written Michael J. Young, elder law attorney in Walnut Creek, CA. www.WalnutCreekElderLaw.com mike@WalnutCreekElderLaw.com. 1931 San Miguel Dr., Suite 220, Walnut Creek, CA 94596. 925-256-0298. Mr. Young serves Contra Costa and Alameda Counties, including the cities of Alamo, Concord, Brentwood, Pleasant Hill, Antioch, Clayton, etc.