Medicaid considers some life insurance policies to be an asset subject to the spend-down process. According to the New Jersey Medicaid regulations, the first step in analyzing life insurance policies is to determine the face value of all of the person’s life insurance policies. According to the applicable New Jersey Medicaid regulation, if the face value of all of the policies is $1,500 or less, then those policies are excluded. The New Jersey Medicaid regulations refer to the policies as an “excludable resource”.
If the face value of all of the individual’s life insurance policies is greater than $1,500 then the cash surrender value of the policy is considered by Medicaid to be an asset. Our New Jersey Medicaid regulation provides that if the total face value of such policies exceeds $1,500 then the total cash surrender value of all policies “shall be included as a resource, countable towards the appropriate resource maximum”. The maximum resource at this time is $2,000.