Ohio Medicaid Eligibility & Life Insurance

Your Ohio Medicaid eligibility may be threatened if you own too much life insurance. Avoid eligibility issues through proper Medicaid estate planning with an Ohio elder law lawyer.

Many people have life insurance policies as part of their estate, so it’s important to understand how they may affect your eligibility should you need to apply for Medicaid at any time. To begin with, any group or individual term insurance policies have no cash value and are exempt from Medicaid, so you don’t need to worry about those.

Any permanent life insurance policy with a face value of $1,500 or less is exempt as a countable resource regardless of the amount of cash value. However, once the face amount exceeds $1,500, all of the cash value (which may be different than the face value) is a countable resource. If the cash value of all your life insurance policies that qualify as countable resources bring your total assets to more than $1,500 when you apply for Medicaid, you’ll be expected to cash in those policies and apply them toward your nursing home expenses before meeting Ohio’s Medicaid eligibility standards.

This is one of many reasons that, in order to prepare for the event that you need Medicaid, estate planning with the aid of an Ohio elder law lawyer is necessary well in advance of any need for Medicaid.

Ohio Medicaid Eligibility Strategies for Life Insurance

Since anyone may eventually have need of a nursing home and need those expenses paid for by Medicaid, estate planning should always include a strategy for transferring ownership of any life insurance policies out of the individual’s name.

Fortunately, under Ohio Medicaid laws, life insurance policies only count against Medicaid eligibility if they are owned by the applicant. It doesn’t matter if the applicant is the person who is insured or even if they are the beneficiary; if another person or entity owns the policy, it doesn’t count against the applicant’s eligibility.

This makes an irrevocable trust an ideal estate planning tool for life insurance policies. Your Ohio elder law lawyer can help you set up a trust and transfer ownership of your policies to the trust. Since the trust owns the policy, it won’t count toward your Ohio Medicaid eligibility. However, it’s important to remember that this transfer must take place at least five years before you apply for Medicaid. Otherwise it will be considered an improper transfer and you could be denied eligibility for a number of months equal to the face value of the policies divided by approximately $6,000 (average monthly nursing home cost in Ohio).

To ensure you will qualify for Medicaid, estate planning is best done with the assistance of a knowledgeable Ohio elder law lawyer. In Ohio, the elder law firm of Gudorf Law Group, LLC, can assist with Medicaid estate planning. Call our office at 1-877-483-6730 to schedule a free consultation regarding Ohio Medicaid eligibility.