Page 346

346 (07/2026) Chapter 2:Eligibility • Section 5: Financial eligibility When the payment is a lump sum due to the death of the insured individual a deduction is allowed, not to exceed $1,500, for the cost of the deceased individual’s last illness and burial if these costs were not otherwise insured. For all programs except MSP, count any amount retained into the following month as a resource. Owner of a life insurance policy Burial insurance that generates a cash surrender value is treated in the same manner as life insurance. Burial insurance that does not generate a cash surrender value is treated as follows: • For all programs except OSIPM, it is excluded. • For OSIPM, it is considered an irrevocable burial arrangement. Treat the value of a life insurance policy as follows: • Cash surrender value means the equity that the policy acquires over time. • Dividend means a payment of surplus company earnings from the insurer. • Dividend accumulation means a dividend left with the insurer to accumulate interest that may be withdrawn without affecting the policy’s face value or cash surrender value. • Dividend addition means the amount of insurance purchased with a dividend that increases the policy’s death benefit and cash surrender value. • Face value means the amount of the death benefit contracted for at the time the policy was purchased and does not include a dividend addition added after purchase of the policy. • Viatical settlement means an agreement allowing a third party to acquire a life insurance policy from a terminally ill individual at an agreed upon percentage of the life insurance policy’s face value. (a) Exclude all term insurance that has no cash surrender value. (b) For all programs except OSIPM, exclude the cash surrender value of the life insurance policy. (c) For OSIPM: • Exclude the cash surrender value of life insurance policies owned by the financial group if the total face value of all policies for the insured individual is less than or equal to $1,500. • If the total face value of all policies is more than $1,500, count the entire cash surrender value as a resource to the owner of the policy. • The total face value does not include dividend addition. A dividend accumulation must count as a resource even if the face value of the policy that generated the dividend accumulation is excluded. • The face value of term life insurance policies excluded under (a) of this section are not counted in determining if the $1,500.00 life insurance exclusion limit is exceeded. • The cash surrender value of a policy acquired through a viatical settlement is excluded. For HSD medical programs, if any of the life insurance payments are from interest accrued on the life insurance plan, the portion of the payment from interest is counted for monthly and annual income. All other payments are excluded for monthly and annual income.