How life insurance proceeds and death benefits are treated depends on the following:
If... |
And the program is... |
Then the treatment is... |
Cash surrender paid to owner |
All programs |
Excluded, as it is a conversion of a resource, not income. |
Accelerated life insurance payments paid to insured |
· ALTCS · SSI-MAO · MSP |
Counted as unearned income. |
· Adult · Caretaker Relative · Pregnant Woman · Child · KidsCare |
Excluded. Benefits paid per diem are excluded up to the amount of actual long-term care costs or the IRS per diem rate, whichever is higher. |
|
Death benefits or life insurance proceeds paid directly to the beneficiary |
· ALTCS · SSI-MAO · MSP |
Counted as unearned income. Exception: Any part of the inheritance that will be used to pay for the deceased person’s burial expenses and outstanding debts is excluded. |
· Adult · Caretaker Relative · Pregnant Woman · Child · KidsCare |
Excluded. |
Term |
Definition |
Death Benefits |
Death benefits include, but are not limited to, the following: · Lump sum death benefits from SSA; · Railroad Retirement burial benefits; · Veteran’s Administration burial benefits; · Inheritances in cash or in-kind; or · Cash or in-kind gifts given by relatives, friends, or a community group to assist with expenses related to the death. |
Accelerated Life Insurance Payments |
Also known as accelerated death benefits or living needs benefits, are the early payment of some or most of the proceeds to the insured during his lifetime. This occurs mainly when the insured is terminally ill or permanently confined to a nursing home. |
Income is first obtained through the Federal and State Data Services Hubs. If needed, other proof includes:
To Verify... |
By... |
Amount of Death benefit |
· Written statement from the insurance company; · Collateral contact with the insurance company; or · Copy of check. |
Last illness, Burial Expenses, and Outstanding Debts |
· Bills; · Receipts; or · Collateral contact with the service provider or billing agency |
This requirement applies to the following programs:
Program |
Legal Authorities |
ALTCS SSI-MAO Medicare Savings Program |
42 USC 1382a(a)(2)(D) and (E) 20 CFR 416.1121(e) |
Adult Caretaker Relative Pregnant Woman Child KidsCare |
42 CFR 435.603 42 CFR 457.10, 300, 301 and 315 |