Can I Transfer Mom’s Life Insurance to Help Her Qualify for Medicaid?

Q: Can I Transfer Mom’s Life Insurance to Help Her Qualify for Medicaid? The nursing home has initiated a Medicaid application for my mother but I have not yet been contacted. Her life insurance policy’s cash value exceeds Medicaid’s $1,000 resource limit in PA. Can I still transfer ownership of the policy?

A: The general rule is no, applicants for Medicaid may not transfer assets during the five years prior to application without triggering a waiting period for benefits. You may, however, withdraw the cash value in excess of $1,000 and spend it down, perhaps prepaying for your mother’s funeral if you haven’t done that already. Unfortunately, practices vary from state to state, so to be certain of your options you need to consult with the Medicaid agency or a local elder law attorney.

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