Life insurance is Medicaid countable only when the policy builds cash surrender value and the combined face value on one insured person exceeds $1,500. Term life insurance with no cash value does not count toward the resource limit in Florida, Texas, Ohio, Pennsylvania, or New York. Whole life, universal life, and variable life policies count at their cash surrender value minus outstanding loans once face values pass the federal exclusion threshold. Death benefits paid to a beneficiary after approval are income in the month received, not a pre-death resource.
Medicaid caseworkers ask one question first: does the policy generate cash surrender value? If the answer is no, the policy usually stays off the countable asset worksheet. If the answer is yes, workers apply the $1,500 combined face value test before they add CSV to your running total.
The resource value is always the cash surrender value, never the death benefit printed on the policy jacket. Eleanor in Scranton owned a $75,000 whole life policy from a 1987 Penn Mutual contract. Pennsylvania DHS counted $6,140 on her March 2026 snapshot because that was the CSV on her insurer statement, not $75,000.
Program type still matters. Nursing-home Medicaid and Home and Community-Based Services waivers apply the full resource test. MAGI Medicaid for working-age adults in expansion states often skips asset questions entirely. This post covers aged, blind, disabled, and long-term-care pathways where life insurance appears on Form H1200 in Texas or the ACCESS Florida asset screen.
Pair this worksheet line with our Medicaid countable assets list so you see where life insurance sits beside CDs, brokerage accounts, and retirement balances.
Common mistake:Families report the death benefit face amount on the application. Caseworkers reject inflated totals and request a current CSV letter. Call the insurer's policy service line and ask for "Medicaid resource verification" showing cash surrender value as of the first of the application month.
Term life insurance pays a death benefit only if the insured dies during the contract period. Premiums buy pure coverage. No cash builds inside the contract, so there is no CSV for Medicaid to count.
Group term life through an employer follows the same rule when the employee cannot borrow against the policy or cash it out. Marcus in Houston carried $150,000 of term coverage through his former employer's retiree plan. Texas HHSC excluded the entire face amount because the summary plan description showed no surrender value.
Convertible term policies get tricky at conversion. The day Marcus converted $25,000 of term to whole life, a CSV appeared. HHSC treated the new whole life block under the $1,500 face value rule starting the month conversion posted.
Term policies listed on our non-countable assets for Medicaid post share the same federal exclusion as household goods and one vehicle. Keep the annual statement in your application folder.
Whole life, universal life, and indexed universal policies build cash value as premiums accumulate. Medicaid counts that CSV when combined face values on one insured person exceed $1,500. Outstanding policy loans reduce the CSV dollar for dollar.
Ohio OAC 5160-1-03.05.12 states the rule plainly: when total face value tops $1,500, the total CSV of all policies on that person counts toward the $2,000 individual resource limit. Policies that have not yet accrued CSV still count toward the face value total.
Diane in Columbus held two whole life policies on herself: a $1,000 face policy with $420 CSV and a $2,500 face policy with $3,100 CSV. Combined face was $3,500, so Summit County JFS counted $3,520 in CSV ($420 + $3,100). She spent down other assets before assignment, not before she understood the face value math.
Variable life policies add a securities layer. New York HRA workers request the insurer ledger showing the cash account balance on the snapshot date. Market swings between statement months can change countable totals by hundreds of dollars.
| Policy type | Cash value? | Countable amount | Typical documentation |
|---|---|---|---|
| Term life | No | $0 | Declaration page showing no CSV |
| Group term (no loan rights) | No | $0 | HR benefit summary |
| Whole life, face ≤ $1,500 total | Yes | $0 (policy excluded) | Insurer CSV letter plus face value list |
| Whole life, face > $1,500 | Yes | Total CSV minus loans | Current CSV statement |
| Universal life | Yes | Total CSV minus loans | Policy ledger with surrender value |
| Burial insurance (no CSV access) | No | $0 (burial exclusion) | Contract showing no cash-out right |
SSI policy manual SI 01130.300 excludes life insurance owned by one person on one insured when cumulative face values total $1,500 or less. Medicaid agencies in SSI-linked states adopt the same threshold. The exclusion applies per insured person, not per household.
Interest and dividend additions do not count toward the $1,500 face value calculation. A $1,400 whole life policy with $200 in accumulated dividends still passes the face value test at $1,400. Those dividends may still count separately as resources, which surprises many families.
Robert in Tampa owned a $1,200 whole life policy on himself and a $400 whole life policy on his wife Linda. DCF counted only Linda's policy toward her own $1,500 test. Robert's $1,200 policy stayed exempt because it insured Robert alone and sat under the cap.
Florida DCF aligns the life insurance burial exclusion with a $2,500 designated burial fund cap under Admin Code 65A-1. A $2,200 term policy and a $300 whole life policy on the same person can both stay exempt in Florida when properly designated, above the federal $1,500 floor. Read our burial fund Medicaid exemption post for designation paperwork.
Common mistake:Buying a new $1,000 policy during spend-down without checking combined face values. A $800 existing policy plus a new $1,000 policy pushes the total to $1,800 and makes all CSV countable. List every policy on each insured person before you add coverage.
Ohio OAC 5160-1-03.05.12 treats dividend accumulations as countable resources even when the life insurance policy itself is excluded because face value is $1,500 or less. Pennsylvania DHS and New York HRA manuals follow the same split.
Think of dividends as a separate savings pocket attached to the policy. The policy shell may be exempt. The dividend pocket is not. Helen in Erie kept a $1,500 face whole life policy with $890 in paid-up additions from forty years of dividends. Crawford County counted the $890 even though the policy face value met the exclusion.
Dividends taken as cash during the look-back window become uncompensated transfers if deposited into a child's account. Dividends left inside the policy still count as resources on the snapshot date.
Ask the insurer for a breakdown showing base CSV, dividend accumulations, and outstanding loans on one letterhead. Caseworkers in Allegheny County reject screenshots from the online portal without a dated agent signature.
A life insurance policy can qualify for the burial fund exclusion when face value is $1,500 or less and the owner designates it for funeral costs. That designation shares the $1,500 burial fund room with a separate savings account. You cannot stack a $1,500 policy on top of a $1,500 bank burial fund in Ohio or Texas.
Irrevocable assignment to a funeral home converts CSV into a prepaid funeral arrangement in many states. The funeral director files an assignment form with the insurer. Once recorded, the CSV leaves the countable column if the contract meets state irrevocability rules.
James in San Antonio assigned a $12,000 CSV whole life policy to a funeral home for an $11,400 irrevocable contract in 2024. HHSC cleared the assignment because the transfer happened more than five years before his 2026 STAR+PLUS waiver application. A sister in Brooklyn who assigned a $9,500 policy in 2025 faced HRA look-back questions on the 60-month transfer worksheet.
Cashing out a policy to pay facility bills creates countable cash the month proceeds hit the account. Our Medicaid exempt assets guide lists allowed spend-down channels, including prepaid funerals and burial spaces, that keep value off the worksheet.
Married couples own life insurance together more often than single applicants. Medicaid still applies the $1,500 face value test per insured person. A policy on the nursing-home spouse and a policy on the community spouse are measured separately.
Community spouse resource allowance rules protect joint savings, but they do not automatically exempt a whole life policy with $14,000 CSV. New York allows up to $33,038 in countable resources for many Chronic Care cases in 2026, yet a large CSV policy can still push a couple over that ceiling.
Patricia in Queens entered a Nassau County nursing home while her husband Frank stayed in their co-op. HRA counted a $7,600 CSV policy on Patricia and excluded a $900 term policy on Frank. Frank's community spouse allowance absorbed joint brokerage assets, but Patricia's policy sat on her individual worksheet line.
Retirement accounts follow different state rules than life insurance. Read are IRAs and 401(k)s Medicaid countable before you liquidate an IRA to pay off a whole life loan.
Florida DCF applies the federal $1,500 life insurance exclusion on Institutional Care Program cases but pairs it with a $2,500 designated burial fund cap. Term policies with combined face value $2,500 or less may stay exempt when designated for burial. Nursing-home applicants still face the $2,000 individual resource limit on countable CSV above those thresholds.
Texas HHSC uses the $1,500 face value test on MEPD nursing facility and STAR+PLUS waiver applications. Harris County caseworkers request Texas Form H1200 attachments showing policy owner, insured, face value, and CSV. Group term through a former employer stays exempt when the plan document shows no cash value.
Ohio Department of Medicaid codified the CSV rule in OAC 5160-1-03.05.12. Cuyahoga and Franklin County JFS offices enforce the dividend accumulation split strictly. Ohio's $2,000 individual cap leaves little room for a $4,000 CSV policy without spend-down or assignment.
Pennsylvania DHS follows SSI resource rules on life insurance for nursing-home Medicaid. The $2,000 applicant limit and $421.20 daily penalty divisor make early CSV planning critical. Philadelphia and Allegheny County offices ask for insurer letters within 30 days of the resource interview.
New York HRA applies seven regional penalty divisors and a $33,038 resource limit for many Chronic Care filings in 2026. Life insurance CSV still counts at full surrender value. Downstate applicants in Kings and Queens counties see the same $1,500 face value exclusion as upstate Monroe County cases.
Common mistake:Using Texas HHSC policy language on a New York HRA filing. New York's higher resource ceiling does not remove the $1,500 life insurance face value test. Each state manual governs the insurance worksheet line.
Spend Down Calculator tools let you enter life insurance CSV alongside bank balances and retirement accounts. Mark term policies as exempt, then add whole life CSV only for policies that fail the face value test.
Florida families model ICP resource limits at the Florida Medicaid spend down calculator. Texas applicants use the Texas calculator for MEPD and waiver cases with the $2,000 cap.
Ohio and Pennsylvania caseworkers apply the same $2,000 individual limit in 2026. Run totals at the Ohio Medicaid spend down calculator and Pennsylvania calculator before you surrender or assign a policy.
New York Chronic Care applicants can test the $33,038 resource ceiling at the New York Medicaid spend down calculator. Enter CSV on policies where combined face value exceeds $1,500 per insured person.
The widgets do not read your insurer letters or decide whether an assignment is irrevocable. They show how CSV shifts your spend-down target after you classify each policy. Pair calculator output with the Medicaid exempt assets guide and a NAELA consult before you change ownership.
No. Term life insurance with no cash surrender value is not a countable Medicaid resource in Florida, Texas, Ohio, Pennsylvania, or New York. Caseworkers need a declaration page showing the policy cannot be cashed out. Convertible term that was switched to whole life may develop countable CSV after conversion.
Federal rules exclude policies when the owner holds insurance on one person with combined face values of $1,500 or less. Florida allows up to $2,500 in designated burial-related coverage under its higher burial fund cap. Above those thresholds, Medicaid counts cash surrender value, not face amount.
Medicaid counts cash surrender value while the applicant is alive. Death benefits paid to a beneficiary after the insured dies are income in the month received, not a pre-death resource. Face amount printed on the policy jacket is not the countable figure.
You can keep whole life when combined face values on one insured person are $1,500 or less and CSV stays exempt. Larger policies require spend-down, irrevocable assignment to a funeral contract, or surrender. Outstanding loans reduce countable CSV.
Yes in Ohio, Pennsylvania, and most SSI-linked states. Dividend accumulations can count as separate resources even when the policy qualifies for the $1,500 face value exclusion. Ask the insurer for a ledger that splits base CSV from dividend additions.
Cashing out creates countable cash the month proceeds arrive. Assignment to an irrevocable funeral contract, paying the applicant's own medical debt, or funding exempt burial items may work better. Run your state calculator and talk to an elder law attorney before you surrender a policy with a large CSV.
