Taking out a life insurance policy is a great way to make sure that your loved ones are financially taken care of upon your death. By doing this, it may create a situation that would make it more difficult to apply and be granted Medicaid. There are a lot of complex factors that go into this decision. We at Robert J Stillwell Agency, are happy to share our insight and answer your questions around this confusing topic. Having life insurance will not automatically disqualify you from Medicaid, but it may make it more difficult. So the simple answer is; yes, you can have life insurance while on Medicaid. Each individual’s circumstances will be different, for the best recommendation call and speak to one of our agents directly.
What Would Qualify You for Medicaid or Help for Part B and or Part D?
Qualifying for Medicaid can be a complex process. In Pennsylvania, if you are single the monthly income limits to qualify for Medicaid and/or Part B/D help range between $1255 and $1883. For a married couple, the monthly income limits are slightly higher ranging between $1704 and $2555. (Please see attached chart to see what you might qualify for). Your resources such as bank accounts, stocks, bonds, IRA accounts, and annuities might be taken into account for qualification. Income limits change every year on January 1st.
| MA Category | Description | 2024 Monthly Income Limit | 2024 Resource Limit |
| Medicaid for Adults Ages 19-64 (MAGI) | Full Medicaid coverage for adults ages 19 through 64. People on Medicare are not eligible for this category. | $1,732 (HH size 1) $2,351 (HH size 2) $2,970 (HH size 3) $3,588 (HH size 4) | Resources not counted |
| Healthy Horizons (QMB Plus) | Full Medicaid coverage for people ages 65 and older and people with disabilities. Includes payment of the Medicare Part A* and Part B monthly premiums. | $1,255 – Single $1,704 – Married | $2,000 – Single $3,000 – Married |
| Qualified Medicare Beneficiary (QMB) | Covers Medicare Part A* and B monthly premiums and cost-sharing. | $1,255 – Single $1,704 – Married | $9,430 – Single $14,130 – Married |
| Specified Low-Income Medicare Beneficiary (SLMB) | Pays the monthly Medicare Part B premium. | $1,506 – Single $2,044 – Married | $9,430 – Single $14,130 – Married |
| Qualified Individual (QI-1) | Pays the monthly Medicare Part B premium. | $1,695 – Single $2,300 – Married | $9,430 – Single $14,130 – Married |
| Medicare Part D Extra Help (Low Income Subsidy or LIS) | Helps Medicare beneficiaries with their Part D (prescription drug) costs. Individuals who do not qualify for Medicaid must meet the income and resources limits shown here. | $1,883 – Single $2,555 – Married | $17,220 – Single $34,360 – Married (includes a $1500 per person disregard given to people who expect to use resources for funeral/burial services) |
| Children’s Health Insurance Program (CHIP) | Children who are not eligible for Medicaid and who do not have any other insurance can qualify for CHIP. Individuals who don’t qualify for free or low-cost CHIP can buy CHIP at-cost. | Free Chip: $3,629 (HH size 2) $4,584 (HH size 3) $5,538 (HH size 4) Low-Cost Chip: $5,434 (HH size 2) $6,864 (HH size 3) $8,294 (HH size 4) | Resources not counted |
| Pennie | Pennie is Pennsylvania’s insurance marketplace. Individuals who do not have other insurance through Medicare, Medicaid or an employer can buy Pennie coverage. People can get Cost Sharing Reduction (CSR) subsidies and/or Advanced Premium Tax Credits (APTC) to help limit the costs of Pennie coverage. To get the CSR subsidies, people must meet income limits and be in a Silver Plan. There are no income limits for the APTC for plan year 2024. | CSR Limit: $3,138 (HH size 1) $4,259 (HH size 2) $5,380 (HH size 3) $6,500 (HH size 4) | Resources not counted |
What Type of Life Insurances Do You Have?
The type of life insurance that you have matters and can ultimately decide if you do or do not qualify.
Term Life Insurance would be exempt from Medicaid consideration due to the fact it is for a limited time and has no cash value. If the policyholder dies within the timeframe, then the beneficiaries are paid out, if the policyholder does not die, then the plan expires and the beneficiaries will receive nothing.
Whole Life Insurance would impact your eligibility because it accrues a cash value. Since it has a cash value, this counts towards your non-exempt limit and may push you over the threshold.
What if You’re Disqualified From Receiving Medicaid?
If you get disqualified, it doesn’t mean it’s the end of the process, there are ways to make adjustments so that you can qualify. One of those ways is to cash out your life insurance policy and spend the money to get you down to the threshold. Some ways that people spend the money to get down to the threshold is to make home improvements so that the home is more accessible to the applicant. When you cash out the policy, the beneficiaries will not receive anything upon the death of the policy holder.
There are a lot of moving parts to Medicaid, it’s very important to speak with someone who is knowledgeable, such as our professionals at Robert J Stillwell Agency. It’s vitally important to know what life insurance policy you have, the value that it’s currently worth, and any sort of assets you may have, exempt or non-exempt. This will help you know what to expect and what your best strategy may be as you go through the process.