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Title 8: Medicaid Page 30 Iowa Department of Health and Human Services Employees’ Manual Chapter E: Income Types of Non-MAGI-Related Income Revised April 11, 2025 Insurance Insurance (Cont.) 20 CFR 416.1123(a), Youngberg vs. Iowa DHS, Polk Co. District Court No. AA3294 (June 12, 2000)  Income Insurance Policy Count the proceeds from income insurance policies as income in the month that proceeds are received, regardless of the period they were meant to cover. An income insurance policy is one that pays a flat-rate benefit without regard to the actual charges or expenses incurred. Examples are:

• Indemnity policies that pay a per diem amount without regard to charges or expenses.

• Disability insurance that pays a flat-rate benefit intended to replace lost income.

• Cancer or dismemberment policies that pay a flat benefit.

NOTE: Benefits from insurance policies that pay a flat rate to an individual are not considered income if:

• The policy was purchased to pay for medical care and with regard to anticipated charges,

• The benefit is payable only if the policy holder actually receives the type of medical care for which the policy was purchased, and

• The benefit is actually used to pay for medical care for which the policy was purchased.

See Third-Party Payments. 20 CFR 416.1121  Death Benefits The part of life insurance and death benefits from Social Security, Veterans Administration, or Railroad Retirement that the beneficiary spends to pay expenses of the insured’s last illness and burial that will not be reimbursed by a third party is not considered income. Count any remaining proceeds as income. Examples of last illness and burial expenses include:

• Hospital and medical expenses remaining after health insurance payments.

• Funeral expenses.