Medicaid: Life Insurance Snafu

Life Insurance Snafu. Petitioner and Respondent stipulated facts in this case. Petitioner applied for nursing home Medicaid in March 2008. DFCS denied the application because Petitioner had three life insurance policies with a cumulative face value of $13,831. Since the face value exceeded $10,000, the cash value of the policies was counted toward Petitioner’s $2,000 resource limit. Oddly, one $10,000 policy was excluded as an exempt burial resource, but the cumulative cash value of the other two policies still exceeded $2,000. Petitioner terminated all three policies on April 21, 2008 by signing a disbursement request form and mailing it to the insurance carrier. The form was stamped received May 5, 2008 and Petitioner received checks totalling $7,418.13 on May 5, 2008. Although Petitioner had no verification the disbursement request was submitted prior to May 1, 2008, Petitioner has a delivery confirmation label and when the number was entered at www.usps.com, Petitioner was able to show that Petitioner mailed an item on April 28, 2008 that was delivered to Waldorf, Maryland on April 30, 2008. Petitioner reapplied for Medicaid in May 2008 and was again denied. DFCS took the position that Petitioner still had the life insurance policies as of May 1st so she was over resourced. Petitioner contended she terminated the policies in April and should have been allowed to designate the proceeds from the policies as burial funds in May (causing her to be eligible beginning in April). DFCS countered that the cash surrender value of life insurance cannot be designated for the burial exclusion. At the time, old Section 2312 indicated that the “CSV of life insurance which caused an excess in the burial exclusion may not be designated as burial funds.” Accepting DFCS’s argument, the Court affirmed the denial, finding that Petitioner was over resourced on May 1, 2008 and, therefore, not eligible in May. (Note: the Current version of Section 2312 allows designation of CSV as a burial fund, although it is unknown why Petitioner didn’t argue that, once received, the CSV was converted to cash which could have been designated as a burial fund).

OSAH-Unknown-Langston-8-2008.pdf (August 13, 2008).