My in-laws are still in their home and are in their late 80's. If one or both of them has to go to a Nursing Home, they will need to be on and will qualify for Medicaid. They own half of a duplex, don't own a car, have a decent income stream, but very little savings - less than $10,000. They do have small life insurance policies, husband has a $10,000 policy, wife has a $6000 policy, the beneficiaries are each other. Wife has little to no memory and no financial input. Husband has some cognitive impairment and is very resistant to change, The question is, if one of them were to be admitted to a Nursing Home using Medicaid for most of the cost and the spouse at home were to die, what happens to the life insurance payment? Also, if the nursing home resident were to die, we have the same question. This is basically their burial insurance, so if the nursing home were to seize it, the children would need to pay for the funeral expenses.
If one was to go into the NH, look into what your state has as its allowance for the community spouse. It called CSRA community spouse resource allowance or MMNA minimum monthly maintenance allowance. each state sets the amount uniquely. Like TX has it as right under $ 2,900.00. So if NH spouse was to have 3k income, in theory his meducaid copay coukd be in thiery only $ 100 a mo, as the at home spouse gets the rest. CSRA is important to do whatever to maximize as often once the more ill spouse goes into a NH, the others health improves as they are not working 24/7 caregiving. If the CSRA is high enough and their expenses are somewhat minimal, it could be that you could hire in home Heath care to assist the at home spouse a few hours each week. So think if that could be a possibility.
About the 10k in assets which is in savings, he is allowed 2k in assets. She as the CS is allowed about 117k. As such, she should be able to keep all of the savings and he still totally qualifies for Medicaid.
There will be a problem with the life insurance policies but not what you think......if the healthier & not in the NH spouse should predecease the NH spouse, then NH spouse will inherit the insurance pay off as they are the beneficiary. Bad bad idea as the increased funds paid to them as beneficiary will take them over the amount allowed by Medcaid. So they get ruled ineligible, have do a spend down, reapply....total butt rash and who is going to do all this? It's you right? I'd suggest that you look into getting their beneficiary changed to be you or perhaps a special needs trust for either of them so that there is never any future issues with assets & Medicaid.
You know most of what you find & articles on Medicaid & NH are from the viewpoint of an individual applicant. A widow or widower. For those, which are something like 80% of applications, although its document heavy, its pretty straightforward....they have to be impoverished with 2k in assets & within your states income limits. But for CS situations it's much more complex. Like the above little detail as to what happens with life insurance beneficiary payout. Personally I think a son or daughter can do their parents individual medicaid application if they have been actively involved in their life, BUT for CS situations your states rules & law really can have all sorts of nuances that need legal expertise to get the best situation done for both & having a eider la atty review thier situation would be best.
If these are term policies with no cash value, they can remain.
If these are policies that have cash value, like whole life, they would have to be cashed in by the owner of the policy IF the owner is going in the NH.
So if the home spouse dies and the NH spouse gets money, Medicaid is interrupted until it is spent down on care. No money for a funeral.
If the NH spouse dies, the home spouse keeps the full amount and can pay for the funeral.