Medicaid Compliant Group Life FAQ

Our Medicaid Compliant Group Life product is a group single premium life insurance policy. It contains no cash value, is irrevocable, and is guaranteed issue, meaning your client does not need to go through medical underwriting. Policies are funded with a single premium payment of up to $1,000,000. Due to its unique specifications, this product is ideal for those engaged in crisis Medicaid planning who are seeking to transfer wealth to their intended heirs.

Individual life insurance policies are written on an individual’s life. Group policies, however, are written on a specific group of people (for example, employees of the same company). In this case, the group consists of members of the insurance company’s fraternal society. By joining the group, members are able to access a policy without going through traditional underwriting.

The product is issued by Western Catholic Union. WCU is a fraternal life insurance society. The group consists of members of fraternal society.

No, an applicant does not need to be Catholic in order to become a member of their fraternal society. There are no other requirements of the group, either. Joining the group is simply a means to access the policy and its benefits for crisis Medicaid planning. It will not impact the client in any other way.

Yes, because the policy is written on a group chassis, there is no need for medical underwriting and there is no age limitation.

The Medicaid Compliant Group Life policy is different for three main reasons—it’s guaranteed issue, carries no cash value, and is irrevocable. Traditional individual whole life insurance policies usually require medical underwriting in order to qualify for a policy. These policies also often contain cash value and can be surrendered or sold. This means the policy would be considered a countable asset for Medicaid purposes (unless it met the $1,500 face value exemption imposed by most states).

What makes the product Medicaid compliant is the same as what makes it different from traditional life insurance policies, namely that it is guaranteed issue, contains no cash value, and is irrevocable. Because it is guaranteed issue, clients of advanced age or have health concerns (which is the case for most crisis planning clients) are still able to qualify. Additionally, because there is no cash value and the policy can’t be surrendered or sold, it won’t be considered an available asset.

No, there is no requirement to name the state Medicaid agency as a beneficiary in any capacity on a life insurance policy for qualification purposes. Most restrictions around life insurance relate to cash or face value. Therefore, your client may name whomever they wish as the beneficiaries of their Medicaid Compliant Group Life policy.

When the owner of the policy passes away, the proceeds from the policy are dispersed to the primary beneficiary through one of two options. The first is to receive periodic payments made over a five-year term. The longer the policy owner lives, the higher the rate of return will be on the periodic payments. Regardless, the payout will always receive a positive rate of return, meaning the beneficiaries will always receive more than what was originally funded into the policy. The second option is to receive a commuted lump sum benefit. Note this will reflect a discount compared to the original premium investment.

The Medicaid Compliant Group Life product may not be recommended in states with expanded estate recovery. We recommend reviewing your state’s specific estate recovery regulations to determine if it may be a good fit.

The policy can be funded via check, ACH, or wire transfer.

The Medicaid Compliant Group Life product makes the most sense for a client to use when they are attempting to transfer their entire spend-down amount to an heir. Specifically, this strategy is a good alternative to the Gift/MCA Plan for a single person. Rather than saving only half of the assets through the Gift/MCA Plan, the client can save up to 100% of the assets for their intended beneficiaries.

In cases involving a community spouse, it may make more sense to use a Medicaid Compliant Annuity so the community spouse receives income from the annuity during their lifetime. Otherwise, all funds within the Medicaid Compliant Group Life product will be inaccessible during the owner’s lifetime.