Massachusetts Estate Planning & Asset Protection Blog

Massachusetts Elder Law Atttoney | Beware – Medicaid Rules on Life Insurance are Tricky

Posted by Massachusetts Estate Planning & Elder Law Attorney, Dennis B. Sullivan, Esq., CPA, LLM on Tue, Nov 27, 2012

Beware – Massachusetts Medicaid Rules on Life Insurance are Tricky

Medicaid does not consider term life insurance policies as a resource, countable toward the appropriate resource maximum. However, Medicaid does count life insurance with cash value as a resource when the total death benefit of all cash value life insurance policies exceeds $1,500. These policies must be cashed in (or sold) and the proceeds spent down. The fair market value of a cash value policy is the amount of cash value, as opposed to the death benefit. Sometimes, the cash value is much smaller than the death benefit, leaving a large spread between the two. In that case a family member may choose to buy the policy.

Note that if the death benefit of all policies totals more than $1500 then all the cash value is countable. Don’t make the mistake of looking at the cash value, and if under $1500, then think it is exempt. It is not unless the death benefit is under $1500.

What Assets Are Exempt for Medicaid Purposes?

The following assets are not countable by MassHealth for Medicaid purposes:

  1. Home, regardless of value in case of a married couple, or up to $786,000 in equity for a single applicant. The home must be the principal place of residence. If single, the nursing home resident may be required to show some “intent to return home” even if this never takes place.

  2. Personal belongings and household goods. New Jersey does not take inventory of these items so basically ignores this category unless it is abused.

  3. One car or truck.

  4. Burial spaces and certain related items for applicant and spouse.

  5. Up to $1,500 designated as a burial fund for applicant and spouse.

  6. Irrevocable prepaid funeral contract.

  7. Value of life insurance if death benefit is $1,500 or less. If total life insurance exceeds $1,500 in total death benefit, then the cash value in these policies is countable.

For more information on Massachusetts Medicaid, download our 19-Point Trust, Estate & Asset Protection Legal Guide.

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at


Tags: Medicaid, Elder Law, Attorney, death benefit, Massachusetts, life insurance

Sign-Up Below To Receive Your Free Report

Follow Me

Browse by Tag

Follow DennisBSullivan on Twitter