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As far as I can tell, the policy was through her employer and it was a term policy.

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Since the policy was not owned by the Medicaid recipient, and since the proceeds were not paid to the estate of the recipient, then the state has no claim to the insurance proceeds.
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No, absolutely not.
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When I applied for Medicaid for my Dad in NY, I was told that as long as the policy was not owned by him (also from employer), it is not his asset and the beneficiary receives the proceeds.
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Depends on who the beneficiary is of the policy. If the beneficiary is a person, then the funds are paid to them and this is outside of probate so outside of any of Medicaid's MERP (estate recovery). BUT if the beneficiary is the deceased estate (which some people do to have funds to settle the estate or to pay for funeral), then it's an asset of the estate.

I'd suggest you look to see if the insurance company has an on-line system to get a policy paid out. Most of the bigger ones do. You will need policy number(s) to get this started. Original death certificate will need to be sent to get paid and it could take a few weeks or several months. If it's an old policy could take longer to process. Good luck.
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I don't believe Medicaid can confiscate life insurance proceeds. Those policies have designated beneficiaries by law, and they usually aren't shown as "Medicaid." Medicaid can and does at times come after a decedent's other estate assets, so whomever the estate executor is should be aware of that and have good legal counsel at the ready.
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The insurance policy goes to the designated beneficiary. Its theirs to do with what they wish. They aren't required to pay the person's outstanding bills or funeral expenses unless maybe if the spouse. I think Medicaid is very aware of persons assets and leans have been put against them.
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In general the life insurance would go toward burial, what ever is left the beneficiary would keep.
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Terryjack - the beneficiary, if it's a person, does not have to give a penny to pay on any debts of the estate - yeah they could give the $ to pay for funeral but they don't have to. The deceased may have thought that Niece Nancy would use the $ to pay for a lovely funeral, but Nancy is not required to do so. Nancy may not give a fig about family…... Niece Nancy doesn't even have to even file to cash in on the policy right away, she could wait months to do so especially if the amount is large and she needs to set up someplace for the money to go into to reduce her tax exposure. Family is often ruthless in my experience.
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I think that the beneficiaries can decide if any of the life insurance proceeds will go to funeral expenses. Did the Medicaid recipient also get a burial insurance policy?
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Would this additional information change any opinions?
My relative died without a will. I am the beneficiary in accordance of descendants. The policy is Term; a monthly insurance payment was being deducted from his retirement check to prevent reduction of the Basic monetary amount. In other words the original life insurance amount stayed the same whether actively employed or retired and a monthly premium came out of his retirement check( instead of his taking the' reducing policy option' coverage).
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