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Title 8: Medicaid Page 112 Iowa Department of Health and Human Services Employees’ Manual Chapter D: Resources Specific Non-MAGI-Related Resources Revised July 10, 2026 Life Estates or Remainderman Interest Insurance (VA Term Life) (Cont.)  Surrenders the policy for cash, the cash is countable income in the month received. Life Estates or Remainderman Interest 20 CFR 416.1201, IAC 75 (Rules in Process) Policy: Property can be divided into two parts, the life estate and the remainder interest. This applies whether the property is real estate or personal property or is liquid or nonliquid. The value of a life estate or remainder interest depends on the value of the underlying property and the life expectancy of the person whose life controls it (the original holder of the life estate).

Comment: Life estates and remainder interests generally count as resources for eligibility purposes. However, if the underlying property would be exempt, the life estate or remainder interest is also exempt.

For example, exclude real property in a life estate as a homestead if the owner of the life estate lives in the dwelling, or if the other exclusion policies for a homestead apply. See Property in a Homestead.

People who receive or retain a life estate (“life tenants”) have the right to use the property during their lifetime, including the right to any income generated by the property during their life. Count income generated according to policy. See 8-E, Lump-Sum Income.

This right has a value and can be sold to someone else. If the original owner of the life estate transfers or sells the life estate to someone else, the recipient of the life estate gets the right to use the property during the life of the original holder. The “life” that determines the life estate does not change with the transfer.

The owner of a remainder interest, the remainderman, has the right to receive the property when the life estate ends. Before the life estate ends, the owner of the remainder interest has no right to use the property or to receive any income from it.