If you have a parent in a nursing home, you’re likely facing a lot of difficult decisions and stressful situations.  It’s natural to feel overwhelmed, but it’s important to remember that you have options and resources available to you.  One question that often comes up is whether the nursing home can take a loved one’s life insurance policy.  Let’s dive into this issue and provide some empowering advice.

Life Insurance vs. Long-Term Care Insurance

First things first:  it’s important to understand the difference between a life insurance policy and a long-term care insurance policy.  A life insurance policy pays out a lump sum of money to your beneficiaries when you pass away.  A long-term care insurance policy, on the other hand, helps cover the costs of long-term care, such as nursing home care.

The Question at Hand:  Can the Nursing Home Take Your Mom’s Life Insurance?

Now, let’s address the question at hand:  can the nursing home take your mom’s life insurance?  The short answer is no, they cannot.  Life insurance policies are typically considered an asset that is exempt from being used to pay for nursing home care.  However, there are a few important caveats to keep in mind.

One important factor is the timing of when the life insurance policy was purchased.  If your mom purchased the policy recently and transferred a significant amount of assets to pay for it, the nursing home may consider that a fraudulent transfer and could potentially go after the policy.  Additionally, if your mom has (for some reason) named the nursing home as a beneficiary on the policy, they may be able to claim those proceeds upon her death.  Also, if the estate was named as a beneficiary rather than an individual person, it could open the door to claims.  Finally, if your mom needs government assistance for her long term care in the form of Medicaid, the ownership of a life insurance policy with cash value will likely have an impact on qualification for benefits.

Karen’s Story

Karen’s mother had a life insurance policy with a death benefit of $100,000.  When Karen moved her mother into a nursing home, she was worried that the nursing home would take that money to pay for her mother’s care.  However, Karen learned that the nursing home could not take the life insurance benefits as Karen was named as the beneficiary, and therefore it was exempt.  Karen was relieved to know that her mother’s money was safe and that she could use it to pay for other expenses after her passing.

Still Have Questions?

If you have additional questions or concerns about nursing home care and estate planning, please don’t hesitate to contact our law firm for guidance and support.  Our experienced Phoenix, Arizona elder law attorneys are here to help you navigate this complex and emotional process and ensure that your loved one’s needs are met.  Take action now to ensure your mom’s future is secure. Contact us today at (602) 274-4400 to schedule a consultation.