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My mother is 80 years old and there is a good possibility that she will need some assistance in the near future.  I'm not sure if she will need to go into a nursing home or if we will have someone take care of her at home.

My question is this:  My mother has a life insurance policy with a cash value of approximately $60,000.  Will this policy effect her qualifying for medicade assistance with her long-term care needs?


Medicaid is a program funded partly by the Federal government and partly by the states. While I am not familiar with the laws of Florida, most Medicaid programs have limits on the amount of assets you can have and still qualify for Medicaid. These rules are commonly called spend down rules, as they require an individual to "spend down" their own assets to a given level before they can qualify for Medicaid. While this is not to be construed as legal advice, there may be a level of net surrender value (cash value minus a loan) that your state will allow your mother to keep her policy in force. For example, if she took a loan for $52,000, that would result in a policy with a net cash surrender value of $3,000, which may be the amount allowable in a burial fund. If the policy is paid up, or can be made paid up, this may be an approach worth considering.  Needless to say, the loan would count as an asset she would be required to spend down prior to becoming eligible for Medicaid. The advantage would be that the policy could still pay out the death benefit (say $70,000), less the loan, and preserve some death benefits for the family.

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Dave Bowman


I will answer questions of a general nature regarding life insurance, disability income insurance annuities (fixed and variable) and long term care insurance. Also, questions regarding estate analysis. No legal or accounting advice, as I am not a lawyer or a CPA. I do not sell health insurance, so have limited knowledge of the current status of that field.


30 years as a life insurance and investment industry professional. Former chapter president of Association of Insurance and Financial Advisors, Buffalo Chapter. CLU designation.

Association of Insurance and Financial Professionals.

B.B.A Economics, U. of Georgia, 1971.

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