Medicaid Policy
Medicaid Policy
No Previous Policy
When an individual revocably assigns the proceeds or the ownership of a life insurance policy to a funeral provider, the individual has the right to change or rescind the assignment at any time. If someone else is named as the owner but the individual's funds were used to purchase the life insurance policy, then a possible transfer has occurred when the policy is only revocably assigned to a funeral provider to fund a burial contract. (594-4.8)
Burial Spaces
Do not apply the burial space exclusion. The funeral provider has not received any payment and the individual has not purchased burial spaces. The provider is not obligated to provide any burial spaces until the individual dies.
Burial Funds for Revocable Assignment of Ownership
The individual still has access to the cash value of the life insurance policy because the individual can rescind the revocable assignment of ownership at any time. The revocable assignment of ownership to the funeral provider to fund a burial contract is a designation of the cash value as a burial fund.
Decide if the burial fund exclusion (592) applies to the cash value of the life insurance policy. Part or all of the cash value may be a countable resource of the individual, even though designated as a burial fund, because it is subject to the maximum or available burial fund exclusion.
Burial Funds for Revocable Assignment of Proceeds
The asset value of the pre-need funeral contract is equal to the cash value of the life insurance policy.
If the face value of all life insurance policies on the individual’s life is $1,500 or less, exclude the cash value under the life insurance exclusion (521-16 2.B, ABD Medicaid). Use the face value of the policy to reduce the burial fund exclusion.
If the face value of all policies exceeds $1,500, apply the policy for burial fund exclusions (592) to the cash value of the policy. Some or all of the cash value may be a countable resource.