One common concern we encounter is the availability of burial insurance for Medicaid recipients.
Individuals in this category often worry about burial insurance accumulating cash value, as this is considered an asset. Medicaid beneficiaries are well aware of the asset limits, typically ranging from $2,000 to $4,000 depending on the state.
However, it’s crucial to understand that you can indeed purchase a life insurance plan with cash value while on Medicaid, and it won’t jeopardize your assets rule. Here’s why.
The cash value of a burial insurance policy, which is the only aspect counted as an asset, takes a considerable amount of time to accumulate.
Burial insurance, a type of whole life policy, accrues interest typically around 2% of your premium. Given this rate, it becomes evident that it will take a substantial duration before the cash value becomes a concern in relation to your asset limit.
If you find yourself approaching the asset maximum, there are actions you can take with the cash value to mitigate or eliminate its impact on your Medicaid eligibility.
While it’s advisable to consult with a licensed health insurance agent for personalized advice, potential options include withdrawing the cash, taking a loan against the value, or utilizing it to pay the premium of your policy.
It’s important to check with a life insurance agent to understand your state’s rules, but most states have exemptions for whole life insurance policies up to a certain face value.
Here’s a simplified breakdown:
– If a policy’s face value is below the exemption amount, the policy is exempt and not counted against Medicaid’s asset limit.
For example:
– Bill in Illinois has a policy quality replica watchesreplica watch usa with a face value of $1,200 and a $500 cash surrender value. With an exemption amount of $1,500 for whole life insurance policies in Illinois, Bill’s policy is not counted towards Medicaid’s asset limit.
– Claudia in Texas has policies with a combined face value of $2,500, exceeding the allowable exemption amount. In this case, the combined cash value of $1,000 becomes a countable asset.