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TITLE 16 HEALTH AND SAFETY DELAWARE ADMINISTRATIVE CODE 25 20340.1.2 Life Insurance as a Resource Life insurance is only considered a resource if the applicant is the owner of policy. A life insurance policy is an excluded resource if its FV and the FV of any other life insurance policies the individual owns total $1500 or less. The policy/policies original face value(s) is considered when determining if the cash surrender value of a policy is countable. Do not include the FV of dividend additions. If the original face value of the policy/policies exceeds $1500, the cash surrender value, including the CSV of dividend additions, is counted toward the applicant's total resources. Applicants have the option to designate life insurance for burial or to retain it as a liquid resource. The individual can also designate any dividend accumulations on the life insurance policy. Some life insurance companies offer to pay the owner of a life insurance policy money that would normally go to the beneficiary of the policy after the death of the insured. These payments are referred to as "accelerated life insurance payments". Some payments are made as a lump sum, others are paid out monthly. The plans vary from company to company but they all involve early payout of some or most of the proceeds of the policy to the insured. Since these accelerated life insurance payments can be used to meet food, clothing, or shelter needs, the payments are income in the month received and a resource if retained into the following month. The receipt of an accelerated payment is not treated as a conversion of a resource. This is because the individual receives proceeds from the policy and not the policy's resource value-which is its cash surrender value. Accelerated payments are not "benefits" for purposes of the requirement to file for other benefits. We do not require a policyholder to apply for accelerated payments as a condition of eligibility. 20340.1.3 Relation to Burial Allowance The $1500 burial funds allowance is reduced by the FV of any life insurance policy or policies excluded under the life insurance exclusion. A total of $1500 FV life insurance is excluded as a resource but must be considered if the individual wants to designate other revocable burial funds. If the individual has burial funds in an irrevocable arrangement, then the maximum $1500 burial allowance is reduced by the face value of any life insurance that has been excluded as a resource AND any amount held in an irrevocable arrangement. SEE: Section 20340.2 - Burial Allowance Section 20340.4 - Life Insurance Funded Burial Contracts Section 20340.5 - Irrevocable Funeral Arrangements If a Medicaid applicant is the beneficiary of another's life insurance, upon death of the insured, the proceeds that are not used to pay for last medical or burial expenses of the deceased would be considered as income for the applicant in the month of receipt. If an expense has been incurred but not yet paid, assume the individual will pay the expense and do not count the death benefit as a resource until the second calendar month following the month of receipt. 20340.2 Burial Allowance We can exclude up to $1500 each in funds set aside for the burial expenses of the individual and the individual's spouse. This exclusion is separate from and in addition to the burial space exclusion. The $1500 burial allowance may consist of revocable burial contracts, burial trusts, other burial arrangements, cash, accounts, or other financial instruments (documents which have a definite cash value). 20340.2.1 Burial Allowance Reductions The $1500 burial allowance is reduced by: a. the face value of any life insurance policy that has been excluded as a resource and b. amounts held in an irrevocable arrangement for the individual's (or spouse's) burial. 20340.2.2 Burial Allowance Combinations An individual can have BOTH an irrevocable burial trust or a funeral funded by an irrevocable assignment of ownership AND separate life insurance with a face value of $1500 or less. If the funeral arrangement is revocable or the individual has designated burial funds, the life insurance of $1500 or less must also be counted toward the $1500 burial allowance. If the face value of life insurance exceeds $1500, the CSV is a countable resource. 20340.2.3 Burial Funds Kept Separate The $1500 burial exclusion applies only to funds set aside for burial expenses that are kept separate from all other resources not intended for burial of the individual (or spouse) and that are clearly designated as set aside for the individual's (or spouse's) burial expenses. If excluded burial funds are mixed with resources not intended for burial, the exclusions will not apply to any portion of the funds. Remember that a burial fund, such as a certificate of deposit, can include both designated, excludable burial funds (up to $1500) and non-excluded burial funds. For example, an applicant has a $2500 CD which is designated for burial. All of the CD's value is burial-related; however, the maximum burial allowance is $1500. This means that $1500 are excludable burial funds and $1000 are non-excluded burial funds. The $1000 is countable toward the liquid resource limit.