Oct
07
2013

Medi-Cal and Life Insurance

An individual can have any amount of Term Life Insurance, and still qualify for Medi-Cal. Term life insurance has been defined as life insurance that pays a benefit in the event of the death of the insured. So if you have a life insurance policy that pays $10,000 upon your death to your son for instance, that policy is exempt for qualification from Medi-Cal. Also, after the Medi-Cal applicant passes away, the $10,000 is paid to the beneficiary son, and there is no recovery by Medi-Cal. Problems can arise however, if the Medi-Cal recipeint receives a benefit from a life insurance policy, upon the death of his spouse for instance. This event could create immediate disqualification for the Medi-Cal recipient. As a result, when we do long term care planning, we take this possibility into account.

Whole life insurance policies are treated differently for Medi-Cal qualification. Whole life polices cannot  have a total face value, or cash value, that exceeds $1500. The cash value of the policy that exceeds $1500 is counted as an asset toward Medi-Cal qualification. An individual can not have more than $2,000 in non-qualified funds in order to qualify for Medi-Cal. As a result, the cash value of the Medi-Cal applicant’s whole life policy in excess of $1500 will have to be reduced and then transferred in order to create qualification. If the applicant has lost mental capacity, the financial durable power of attorney, provided it has the appropriate language, would be relied upon to liquidate the policy and then to possibly gift the excess amounts, in order to create Medi-Cal qualification. All of these issues should be taken into account as part of long term care planning.   

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com we practice Elder Law and we help Baby Boomers and families through the Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

die after having been on Medi-Cal, and your term life insurance policy pays a benefit in the amount of $10,000 to your son, for instance .

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