Will Medicaid take life insurance proceeds after I die?


Q. If I have an insurance policy that has no cash value and my son is the beneficiary, when I die and he receives the money, will Medicaid file a lien on that money? Would my son have to pay it?
— Uncertain

A. Many families are surprised that Medicaid will go after funds if it pays for your care before you die.

We’re glad you’re planning ahead so your son isn’t surprised, too, by Medicaid rules.

New Jersey Medicaid considers proceeds from term life insurance policies with no cash benefit to belong to the named beneficiaries and are not subject to estate recovery, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

But, she said, proceeds from whole life policies are subject to estate recovery if they are not liquidated prior to the death of the Medicaid recipient.

The beneficiary designation is important, she said.

“Proceeds from any life insurance policy are recoverable when the designated beneficiary is the estate of the Medicaid recipient,” she said.

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This story was originally published on Sept. 13, 2021. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.