Ask Rob

Q: 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 $1,500 resource limit. 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 penalty period for benefits. You may, however, withdraw the cash value in excess of $1,500 and spend it down, perhaps prepaying for your mother’s funeral if you haven’t done that already. Also if the death benefit is significant and the premiums are not too bad, you could take out all of the cash value and then transfer the policy to a family member who can pay the premiums and receive the death benefit in the future.