“If I have life insurance in place, will I be able to keep it if I apply for Medicaid or VA benefits?”
We get this question a lot from people applying for Medicaid or VA benefits eligibility, and the answer is not be as simple as it may seem.
In a Medicaid context, in both Illinois and Missouri, you’re allowed to keep only $1500 worth of life insurance. For VA benefits, you can have life insurance as part of your asset allowance, which is going to be somewhat more than Medicaid, but not a great deal more. Plus, if you cash a life insurance policy in during your lifetime, you inevitably lose money on the transaction.
In this Elder Law Minute, Wes Coulson, Southern Illinois Elder Law attorney, discusses life insurance in the context of Medicaid and VA benefits eligibility and explains why you may want to do some asset preservation planning to protect it.
Life Insurance and Medicaid or VA Benefits Eligibility
Transcript:
Hi, I’m Wes Coulson and this is your Elder Law Minute. I want to talk to you today about the subject of life insurance in the context of Medicaid or VA benefits eligibility. The obvious question is, “Well, if I have life insurance in place, will I be able to keep it?” The answer is, it depends but probably not and here is what I mean by that.
In a Medicaid context, in both Illinois and Missouri, you’re allowed to keep only $1500 worth of life insurance. The way that’s defined is, interestingly enough, a little bit different in each state. In VA you can have life insurance as part of your asset allowance, which is going to be somewhat more than Medicaid, but not a great deal. Life insurance is something that, in a benefits eligibility context, really screams out for planning because if you cash a life insurance policy in during your lifetime, you inevitably lose money on the transaction. It’s worth less cashed in than it would be if you held onto it until you died. And we’ve seen instances in which the difference in values was very large.
So, there are things that you can do by way of planning to protect your life insurance as part of an overall asset preservation plan. If you have life insurance, this is something that you’re really going to want to check into. We’ll be happy to help. Thanks.
For more information on Assets and Asset Preservation Planning, visit these articles:
- What You Can and Can’t Keep With Medicaid: Life Insurance
- What You Can and Can’t Keep With Medicaid: IRAs and Other Retirement Assets
- How An Asset Preservation Trust Protects Your Life Savings From Long-Term Care Costs
“Your Trusted Advisor on the Elder Care Journey”
Dent-Coulson Elder Law is dedicated to providing families in the St. Louis area with their Elder Law needs. Our practice areas include Asset Preservation Planning, Veterans Benefits, Medicaid Eligibility, Alzheimer’s Planning, Special Needs Planning, Estate Planning and more. We understand the financial challenges you may face as you and your loved ones grow older. At Dent-Coulson Elder Law, our clients’ well-being is our number one priority. For immediate help, call (877)995-6876 or Contact Us and we will get in touch as soon as possible.
