Pennsylvania Medical Assistance does not look at what a life insurance policy is worth. It looks first at the total death benefit on the insured’s life across every policy they own — and only if that combined face amount exceeds a small threshold does the cash value become a countable asset at all. That single rule decides whether a Havertown family has to touch a policy or can leave it entirely alone, and it is the rule almost nobody in Media, Upper Darby or Chester has heard of.
The rule produces results that feel wrong. A $1,200 burial policy with $900 of cash value is generally disregarded completely. Add a second $1,000 policy from a fraternal organization and the combined face amount crosses the line, and now the cash value of both becomes countable. A $250,000 term policy with no cash value counts as nothing, while a $30,000 whole life policy with $14,000 of cash value counts as $14,000. The size of the death benefit does not determine the countable amount; it determines whether the cash value is looked at.
This page is organized around that rule, policy type by policy type, with Delaware County’s actual offices and costs attached. Pennsylvania’s program is Medical Assistance, and long-term services run through Community HealthChoices. Pine Lake Life Solutions provides education and a free policy review only; nothing here is legal, tax, or Medicaid-eligibility advice.
In This Article
- The Rule That Runs Backwards: Face Value First, Cash Value Second
- Term Life: No Cash Value, Nothing Countable — and Still Possibly Valuable
- Whole Life and Universal Life: Where the Cash Value Actually Counts
- Burial Policies, Final Expense, and the Aggregation Trap
- The Irrevocable Funeral Trust: Where Countable Cash Value Can Legitimately Go
- Four Alternatives to Surrender, Ranked by Situation
- Delaware County: Where to File, What Care Costs, and the Hospital Problem
- When Selling Is the Wrong Answer — and Pennsylvania’s Filial Law
- Frequently Asked Questions
The Rule That Runs Backwards: Face Value First, Cash Value Second
Mechanically, here is the sequence a caseworker applies. Add up the total face amount — the death benefit — of every life insurance policy insuring the applicant. Compare that total to the state’s face-value threshold. If the total is at or under the threshold, the cash value of every one of those policies is excluded from countable resources. If the total exceeds the threshold, the entire cash surrender value of all of them becomes a countable resource.
Two things about the threshold. The long-standing federal SSI baseline is $1,500 of combined face value, and most states follow it. Pennsylvania applies its own figure for Medical Assistance, and it is not necessarily identical across every eligibility category. Get the number that applies to long-term care Medical Assistance in 2026 in writing from the Delaware County Assistance Office rather than relying on any article, including this one. This is the one figure worth a phone call.
The second point: the threshold is measured on face amount, not on how many policies there are or what they cost. Families who own several small policies from different decades — a burial policy from a funeral home, a fraternal certificate, a bank-issued policy from the 1970s — are frequently over the line without owning anything anyone would call substantial. Inventory all of them before assuming any of them is safe. Our explainer on how life insurance is counted as a Medicaid asset covers the general framework.
Term Life: No Cash Value, Nothing Countable — and Still Possibly Valuable
Term insurance builds no cash value. It pays a death benefit if the insured dies during the term and nothing otherwise. Because there is no cash surrender value, a term policy contributes nothing countable to a Medical Assistance resource calculation, regardless of how large the death benefit is. A $500,000 term policy is not a countable asset.
Families still make two mistakes with term policies during spend-down. The first is letting one lapse to “simplify” the file. It was never a problem, and lapsing destroys whatever value it held. The second is assuming it has no value at all. A convertible term policy — one carrying a conversion rider that lets it be exchanged for permanent coverage from the same carrier without new medical underwriting — can hold real market value, particularly for an insured whose health has declined since the policy was issued. That conversion right almost always expires long before the term does, commonly at a stated policy year or a stated attained age.
Practical instruction: find the declarations page and the rider schedule, and get the conversion expiration date from the carrier in writing. That date, not the Medicaid application date, is the deadline that matters for a term policy. If the conversion window has closed and no one needs the coverage, letting it end is a legitimate outcome rather than a failure.
Whole Life and Universal Life: Where the Cash Value Actually Counts
Whole life, universal life, indexed universal life and guaranteed universal life all accumulate cash value, at wildly different rates. This is where the aggregation rule bites: once combined face amount crosses the threshold, the full cash surrender value of these policies is a countable resource against the $2,000 long-term care limit (verify the 2026 figure, and note that Pennsylvania maintains separate, higher resource limits for some non-long-term-care Medical Assistance categories).
Three cautions specific to this category. First, cash surrender value is not the same as the account value or the illustrated value — surrender charges, outstanding policy loans and unpaid premiums all change the number. Request an in-force illustration and a current surrender value quote from the carrier in writing; the annual statement is not sufficient.
Second, an outstanding policy loan reduces both the surrender value and the death benefit, and families are frequently unaware one exists — a premium paid automatically from cash value creates one silently.
Third, guaranteed universal life behaves differently from whole life in a way that matters here. GUL is engineered for a large guaranteed death benefit with minimal cash value, so it may be nearly worthless on surrender while carrying a substantial face amount. Surrendering it is often the worst available option. A properly priced secondary-market review is sometimes the best one.
Burial Policies, Final Expense, and the Aggregation Trap
This is the category that produces the most unnecessary loss in Delaware County, because the policies are small, sentimental and numerous. A “burial policy” or “final expense” policy is simply small-face whole life, usually $2,000 to $25,000, frequently sold through a funeral home, a fraternal organization, a church group or a direct mailer.
The trap is arithmetic. Each policy individually looks harmless. Aggregated, three $5,000 policies are $15,000 of face value — far over any threshold — which makes the combined cash value of all three countable. Meanwhile, each one is far too small to be a settlement candidate: the secondary market generally does not look at death benefits under roughly $100,000, so “sell it” is not an option here at all.
What is an option: Pennsylvania recognizes a modest burial fund exclusion and separately excludes burial spaces — the plot, the vault, the marker, the opening-and-closing agreement — from countable resources, generally without counting against the burial fund allowance. A family can purchase a burial space in Delaware County and move that money out of the countable column entirely. Confirm current Pennsylvania limits and treatment with the County Assistance Office, and keep every receipt.
One more caution about this category. Small burial policies are a frequent vehicle for high-pressure selling. If anyone tells you a product is “Medicaid approved” or guarantees eligibility, treat that as a signal to slow down and get independent advice from APPRISE or an attorney.
| Policy type | Counts toward the face-value total? | Cash value countable? | Best move if it is countable |
|---|---|---|---|
| Level term, no conversion right | Yes | No cash value | Nothing to do; do not lapse it needlessly |
| Convertible term | Yes | No cash value | Get the conversion deadline in writing; may have market value |
| Employer or union group term | Yes | Usually none | Check the conversion right and any age-based reduction |
| Whole life | Yes | Yes, if the total exceeds the threshold | Reduced paid-up, funeral trust, or a settlement review |
| Universal life | Yes | Yes, if the total exceeds the threshold | Request an in-force illustration; check for policy loans |
| Guaranteed universal life | Yes | Minimal by design | Rarely worth surrendering; consider a settlement review |
| Burial / final expense policies | Yes, and they aggregate fast | Yes, once aggregated over the threshold | Irrevocable funeral trust or burial space purchase |
| Burial space (plot, vault, marker) | Not life insurance | Generally excluded | Legitimate destination for countable dollars; keep receipts |
The Irrevocable Funeral Trust: Where Countable Cash Value Can Legitimately Go
When a policy’s cash value is countable and the family wants that money to serve its original purpose rather than disappear into a nursing home bill, the usual answer is an irrevocable prepaid funeral arrangement or funeral trust. Structured correctly, it is generally treated as an excluded resource within the limits Pennsylvania applies.
The word irrevocable does all the work. A revocable prepaid contract is generally still countable, because the applicant can get the money back. Funding an irrevocable arrangement is not a gift and not a transfer for less than fair market value, so unlike giving a policy to a child it does not create a look-back penalty period.
Get three things right. The limit — ask the Delaware County Assistance Office for the current Pennsylvania figure before funding. The beneficiary and assignment language — this is where standard funeral home forms sometimes fall short. And the sequence — surrendering a policy and then funding a trust is a different transaction chain than assigning the policy directly, and the two can produce different results. Have a Pennsylvania elder law attorney review the paperwork.
Four Alternatives to Surrender, Ranked by Situation
Surrender is the default families reach for and rarely the best available choice. There are four other paths.
1. Accelerated death benefit. Check the rider schedule first, before anything else. If the insured is terminally or chronically ill and the policy carries a qualifying accelerated death benefit rider, a portion of the death benefit may be payable directly by the carrier with no third party and no fees. This is free money the family already owns and it is routinely overlooked.
2. Reduced paid-up election. Many whole life contracts permit the owner to stop paying premiums and take a smaller, fully paid-up death benefit. That eliminates a premium the household can no longer afford while preserving coverage — and it reduces the face amount, which can matter for aggregation. Our comparison of reduced paid-up versus a settlement lays out when each wins.
3. Irrevocable funeral trust. Covered above. Best when the family’s real objective is making sure a funeral is paid for.
4. Secondary-market review. Appropriate for a larger policy — roughly $100,000 of death benefit or more — on an insured whose health has genuinely declined. It can pay several times surrender value in the right circumstances, and it pays nothing if the case does not fit. A settlement runs 60 to 120 days from review to funding, so timing has to be planned against the application date, not discovered afterward.
Delaware County: Where to File, What Care Costs, and the Hospital Problem
Applications go to the Pennsylvania Department of Human Services Delaware County Assistance Office, which has operated locations serving the Chester and Upper Darby areas, or through Pennsylvania’s COMPASS online portal. Confirm the current office locations, hours and document list before you go — county assistance office operations have changed in recent years.
Free, independent help sits with the Delaware County Office of Services for the Aging — COSA — the county’s Area Agency on Aging, based in Eddystone, which also delivers APPRISE, Pennsylvania’s federally funded health insurance counseling program. APPRISE counselors sell nothing and can explain what Medicare will and will not cover after a hospital stay, which is the confusion that starts most private-pay spirals. For insurance carrier disputes, the regulator is the Pennsylvania Insurance Department. For who may lawfully broker or purchase a policy in the state, see Pennsylvania life settlement licensing.
Cost, because it sets the clock. As of 2026, expect roughly $12,500 to $15,000 per month for a private skilled-nursing room in Delaware County, $11,500 to $13,500 semi-private, and $4,500 to $7,000 for assisted living. The Philadelphia suburbs run above the Pennsylvania median. These are survey-based ranges, not quotes — get three written rates. Our Delaware County cost page goes rung by rung.
Three local facts change the math here. Delaware County has lost significant hospital capacity in a short period: inpatient services at Delaware County Memorial Hospital ceased in 2022, and the Crozer Health system wound down facilities in 2025 amid its parent company’s bankruptcy. Confirm current local capacity yourself, because it affects discharge planning and where a parent can actually be placed. Second, this is a densely populated county with a large stock of pre-1940 rowhomes in Upper Darby and Chester, which means home equity is real but modest and maintenance costs are high — relevant when someone is trying to keep a house while a parent is in care. Third, the income gap inside the county is extreme: the same $2,000 asset limit lands on a Chester household and a Radnor household, and “spend down” means completely different things in each.
When Selling Is the Wrong Answer — and Pennsylvania’s Filial Law
Say the limits plainly. Selling a policy is the wrong move when the face amount is small: under roughly $100,000 the secondary market is generally not interested, and every burial and final expense policy in the shoebox is in that category. It is wrong when the combined face amount insuring the applicant already sits inside the aggregation exclusion, because a sale converts an excluded resource into countable cash and creates a problem where none existed. It is wrong when the insured is in good health for their age, because pricing is driven by life expectancy and offers will be weak or absent. It is wrong when a surviving spouse genuinely needs the death benefit, and a reduced paid-up election may solve the premium problem instead. And it is wrong on timing when a 60-to-120-day process would drop cash into the middle of a pending application unplanned.
One Pennsylvania-specific item belongs at the end, because families here should know it exists. Pennsylvania is one of a minority of states that still has a filial responsibility statute on the books, in the domestic relations title of its consolidated statutes, under which an adult child can in narrow circumstances be pursued for an indigent parent’s care costs. It is invoked rarely and its application is fact-specific. It is not a reason to panic, and it is a genuine reason to have a Pennsylvania elder law attorney involved rather than improvising — particularly if a family is considering paying a facility directly or guaranteeing a bill.
Where a sale genuinely helps: a larger whole life, universal life, guaranteed universal life or convertible term policy on an insured whose health has genuinely declined, where the realistic alternative is surrender for a fraction of the death benefit or lapse for nothing. If you want a straight answer on a specific policy before any money moves, send the policy cover page for a free, no-obligation review. If the honest answer is that it has no market value, that is what you will hear.
Frequently Asked Questions
Does a $200,000 term policy count against the Medicaid asset limit?
No. Term insurance has no cash surrender value, so it contributes nothing countable no matter how large the death benefit. It still counts toward the combined face-value total that determines whether other policies’ cash value is looked at. And if it carries a conversion rider, that right may hold real market value — get the conversion deadline from the carrier in writing.
We have three small burial policies. Is that a problem?
Possibly, because face amounts aggregate. Three $5,000 policies total $15,000 of death benefit, which exceeds any face-value threshold and makes the combined cash value of all three countable. Each is also far too small for the secondary market. The usual solutions are an irrevocable funeral arrangement or purchasing a burial space, both generally excluded within state limits.
What is the face-value threshold in Pennsylvania?
The federal SSI baseline is $1,500 of combined face value, and most states follow it, but Pennsylvania applies its own figure and it is not necessarily identical across eligibility categories. Get the number that applies to long-term care Medical Assistance in 2026 in writing from the Delaware County Assistance Office. This is the one figure worth a phone call.
Where do I file in Delaware County?
With the Pennsylvania Department of Human Services Delaware County Assistance Office, which has operated locations serving the Chester and Upper Darby areas, or online through COMPASS. Confirm current locations, hours and the document list first. The Delaware County Office of Services for the Aging in Eddystone can help you understand home and community options.
Should we surrender my mother’s whole life policy?
Not before comparing four alternatives. Check the rider schedule for an accelerated death benefit if she is terminally or chronically ill — that pays with no fees. Consider a reduced paid-up election to stop the premium, an irrevocable funeral trust to shelter the cash value, or a secondary-market review if the death benefit is roughly $100,000 or larger.
Is a burial plot countable in Pennsylvania?
Generally no. Burial spaces — the plot, vault, marker and opening-and-closing agreement — are typically excluded from countable resources, separately from the modest burial fund allowance. That makes purchasing a space a legitimate way to move money out of the countable column. Confirm current Pennsylvania limits with your County Assistance Office caseworker and keep every receipt.
What does nursing home care cost in Delaware County?
As of 2026, roughly $12,500 to $15,000 monthly for a private skilled-nursing room, $11,500 to $13,500 semi-private, and $4,500 to $7,000 for assisted living. The Philadelphia suburbs run above the Pennsylvania median. These are survey-based ranges. Note also that local hospital capacity contracted in 2022 and 2025, which affects discharge planning.
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Related Reading
- Nursing Home Costs Delaware County Pa
- Sell Life Insurance Policy Delaware County Pa
- Pennsylvania Medicaid Asset Income Limits
- Life Settlement Licensing Pennsylvania
- Sell Life Insurance Policy Chester County Pa
- Nursing Home Medicaid Spend Down
- Life Insurance Counts Medicaid Asset
- Reduced Paid Up Vs Settlement
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.