Can Medicaid purchase this life insurance policy?


Q. A resident of New Jersey who had been taking Medicaid for approximately 20 months before her death in January 2021 has passed away. We now learn that there is a life insurance policy with a value of $ 15,000 or less for which some named beneficiaries have also died. There are other surviving beneficiaries – nieces and nephews). The only other asset of this individual is a bank account worth $ 6,000 for which we are waiting to know how much the Medicaid privilege will amount to. If the life insurance policy is paid out of the estate directly to nephews and nieces, is Medicaid entitled to a lien on these products?

– Uncertain

A. We are sorry to hear of your loss.

As with many things Medicaid related, the quick answer to your question is, it depends.

Specifically, it depends on the type of policy and whether Medicaid was made aware of the policy at the time the benefit claim is submitted, said Jason Marx, chair of the Tax & Estate Planning and Elder Law & Special Needs Planning groups at Curcio. Mirzaian Sirot in Roseland.

“If the insurance policy were a term policy, such a policy would not have been considered an” available resource “for Medicaid purposes and, therefore, monies paid after death should not be garnished under the Medicaid estate collection lien, ”he said.

But if the policy was a whole life policy or some other type of permanent policy with cash value, Medicaid should be able to attach a lien to the remaining cash value of that policy, Marx said.

Other problems could arise if the policy was permanent and the cash value exceeded the maximum amount of resources a Medicaid claimant can have.

Due to the complexity, we recommend that you speak to an estate planning attorney who has experience with Medicaid lien issues.

Email your questions to [email protected].

Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for‘s weekly electronic newsletter.


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