Life insurance and Medicaid
long-term services and supports
You may be able to get Medicaid long-term services and supports even if you own life insurance. To get Medicaid:
- The value of things you pay for or own must be below Medicaid limits.
- You must give us facts about life insurance you own.
You may also be able to use your life insurance to help pay for long-term services and supports.
Who can get Medicaid for long-term services and supports?
A person who:
- Either has a disability or is age 65 or older.
- Needs 30 or more days of continuous, long-term services and supports.
- Has little or no money.
- Doesn’t own or is not paying for items over a certain value, including some kinds of life insurance. (Items that aren’t counted are homes, vehicles, limited amount of burial funds, and personal belongings.)
Will the state count my life insurance?
There are different types of life insurance. Not all life insurance counts when the state checks to see if you can get Medicaid for long-term services and supports. The state might count your life insurance if:
- The insurance company will pay you cash if you cancel the policy.
- The insurance company will pay more than $1,500 to someone if you died.
How does the state count cash I can get from life insurance?
Cash a person has from the following life insurance options might be counted when checking to see if the person can get Medicaid:
- Accelerated death benefits: An insurance policy with accelerated death benefits may pay cash to a person before they die if: (1) they have an illness that could cause death, or (2) they are in a long-term services and supports facility, such as a nursing home.
- Cancellations: A person may get a cash payment when an insurance policy is cancelled.
- Life settlement: A life settlement (also known as a viatical settlement) lets a person sell a life insurance policy to a life settlement company. Texas law allows a person with a life insurance policy to enter into a life settlement to help pay for long-term services and supports, including home health, assisted living, and nursing home services. Under Texas law, the cash a person gets from a life settlement can be placed in a bank account that can be used only for long-term services and supports and funeral expenses. When the person with the life settlement dies, the person’s estate or beneficiary gets any cash that has not been spent. The state might not count these life settlements when checking to see if a person can get Medicaid.
- Loans or Policy Loans: Some life insurance policies allow the policy holders to get a cash payment as a loan before they die.
Cash that has been used for the person or the person's spouse might not be counted when checking to see if the person can get Medicaid. For example:
- Cash that has been used for the person's long-term services and supports.
- Cash that has been used to pay for the person's burial.
- Cash that has been used to pay off the person's home or car.
What information will the state ask about my life insurance policy?
If you own life insurance and are applying for Medicaid, you must give the:
- Name of the life insurance company.
- Type of insurance (whole, term, burial).
- Policy number.
- Face value for all life insurance policies you own.
You can get these facts in your life insurance policy, an annual statement, or letter from the life insurance company. You may also be asked for more facts depending on the kind of life insurance you have.
Where can I get more facts?
You can find more information about life insurance options at:
- Texas Department of Insurance
- Federal website on using life insurance to pay for long-term services and supports
State rules for deciding if a person can get Medicaid for long-term services and supports:
You may be able to get legal help from one of these groups, legal aid offices, or lawyer referral services:
- Area Agency on Aging
- National Academy of Elder Law Attorneys
- Disability Rights Texas
- State Bar of Texas
HHSC cannot give you legal advice or tell you what actions to take to help you get Medicaid.