transfer of assets under Medicaid
A man in Ohio has received a whole-life insurance policy with cash value as repayment for his loan to a liquidating corporation. He wants to make someone other than his wife the beneficiary on the policy so the wife will not have to spend down the death benefit to qualify for Medicaid, if he dies before she does. He is afraid that if he chooses a beneficiary other than the wife, then dies before the wife does, Medicaid will impose a penalty period on his wife for his having made someone other than she the primary beneficiary of the policy death proceeds, and this will delay her qualifying for Medicaid benefits, if she applies for them within 3 years following the beneficiary switch. Might this be true here Ohio (which is not a community property state)? Thank you.
2 Answers from Attorneys
Re: transfer of assets under Medicaid
Under current Ohio regulations, the change of beneficiary is not considered an improper transfer. However, the cash value of the insurance is considered a countable asset if one of the spouses would apply for Medicaid benefits before the policy paid out.
Re: transfer of assets under Medicaid
As long as he is the owner of the policy; meaning he and he alone controls who the beneficiary, and the assests used to obtain the policy was his, that is the money loaned to the corp. which is now being paid back, then he can name anyone he wants as the beneficiary, other than the wife, and it will not effect his wife's medicaid qualification. Medicaid looks at what she owns, or has owned 36 months prior to her application. Medicaid does not look at what she could have owned. In fact, changing the beneficiaries on life insurance policies is an important step in medicaid planning.
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