If you have Medicare, but you’re still having trouble affording your medical bills, you may want to look into Medicaid for seniors. However, like all government programs, you must qualify for coverage. When looking at eligibility requirements for Medicaid, one thing to take into consideration is the value of your life insurance policy.
What is Medicaid?
Medicaid is a type of insurance for people with low incomes. For seniors who qualify, Medicaid provides even more coverage than having Medicare on its own. In the United States, more than 12 million seniors are qualified to enroll in both Medicare and Medicaid. If you have both Medicare and Medicaid, you will pay very little in out-of-pocket costs for your healthcare.
If you are eligible to enroll in both Medicare and Medicaid, Medicaid may help cover many of the things that Medicare does not. This includes:
- Stays in skilled nursing facilities
- Prescription drugs
- Hearing aids
- Eyeglasses
- Transportation to and from medical appointments
- In-home healthcare
- Other out-of-pocket expenses not covered by Medicare
Who Qualifies for Medicaid?
Medicaid is health insurance for low-income individuals, families, children, pregnant women, seniors, and people with disabilities. Qualifying for Medicaid depends on your family size and your income.
While Medicare is administered at the federal level, Medicaid is administered at the state level under federal guidelines. Different states have different qualifying factors for Medicaid. To find out if you qualify, check with your individual state website about Medicaid.
There are many factors that Medicaid considers when determining your eligibility, including your income and assets. Though states vary, most states have an asset limit of $2,000 when it comes to qualifying for Medicaid. If you think you might qualify or have any other questions, contact your individual state about Medicaid.
Does Life Insurance Affect Medicaid Eligibility?
If you’re thinking about applying for Medicaid, you might wonder if your life insurance policy will impact your eligibility. It depends on the type of life insurance you have and the value of your policy.
The two main types of life insurance for seniors are term life insurance and whole life insurance:
Term Life Insurance: This life insurance only provides coverage for a certain amount of time, usually between five and thirty years. If you die while you have your term life insurance policy, your beneficiary will receive a payout. If you do not die before the end of the term, no one gets a payout from the policy.
For this reason, a term life insurance policy does not count as an asset. It will not affect your Medicaid eligibility.
Whole Life Insurance: Whole life insurance is insurance that you have for the rest of your life, as long as you pay your premiums. Most whole life insurance policies begin to accumulate a cash-value after a certain amount of time has passed.
When a whole life insurance policy has a cash value, this means you can use that money as you see fit. You also have the option of canceling the policy and getting a cash payout. Since this money is considered yours, it might count as an asset when you apply for Medicaid. However, Medicaid usually only counts whole life insurance as an asset if the face value is $1,500 or more.
What Are My Options if I Have Whole Life Insurance?
You do have several different options if you think you won’t qualify for Medicaid because of your whole life insurance policy. Here are some options if your whole life insurance policy disqualifies you from Medicaid:
- Cash Out the Policy: This will terminate your policy and you will get a cash payout. You can then spend the money to reduce your assets to below Medicaid’s limit. Good ways to spend the money are on home improvements or paying off debt. Just beware that Medicaid does have a look-back rule to make sure you haven’t sold assets under their fair value.
- Take Out the Cash Value: If you can take out a loan against your whole life insurance policy, you’ll be able to keep your policy. Taking out a loan reduces the cash value of the policy. You might be able to take out enough to reduce the cash value, so you qualify for Medicaid.
- Transfer the Policy: You may be able to transfer the policy to your spouse (if they don’t also need Medicaid) or even a funeral home to pay for your final expenses.
Americo Senior Life Offers Affordable Whole Life Insurance
Americo Senior Life offers permanent, affordable whole life insurance policies to cover any expenses, such as paying outstanding debts or replacing lost income. Give yourself and your family the peace of mind of a whole life insurance policy through Americo. If you or someone you know is interested in whole life insurance to cover final expenses, Americo Senior Life is here to help. We have many options to suit your specific needs. Our professional agents can answer all your questions so that you can make a confident, informed choice. You can also refer to our FAQ center for additional questions.
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