The most commonly missed source of private-pay runway in a skilled nursing business office is a life insurance policy sitting in a resident’s file that nobody asked about — and the fix is one line on the financial-resources page of the admission packet. Does the resident own life insurance with a death benefit over $100,000? That question takes a family thirty seconds to answer and surfaces an asset that, in Illinois, is very often about to be surrendered for a fraction of its market value or allowed to lapse entirely.
This page is written for business office managers and admissions staff, not for residents. It covers where the policy shows up, how it interacts with an Illinois Medicaid application, and — importantly — the boundary lines that keep the facility out of anything resembling a financial recommendation or a referral-fee arrangement.
Pine Lake Life Solutions provides education and free policy reviews. We do not pay facilities, and nothing here is legal, tax, or financial advice to a resident or a family. Questions: (305) 209-7183.
In This Article
The Boundary, Stated First
Because this is the question a compliance officer will ask before anything else: nothing on this page contemplates a facility endorsement, a referral fee, a commission, or any compensation arrangement between a skilled nursing facility and a settlement company. Pine Lake does not pay facilities or their staff. Federal fraud and abuse rules and Illinois licensure standards give facilities good reason to keep financial vendors at arm’s length, and a business office that accepted payment for steering residents toward a financial transaction would be creating a problem far larger than any A/R it solved.
What is appropriate is what business offices already do with Medicaid application assistance, veterans benefits information, and long-term care insurance claim forms: hand the family neutral educational material about an option that exists, and let the family decide independently with their own advisors. That is the entire posture of this page. If your facility maintains a resource list for families, an educational one-pager about the secondary market for life insurance belongs on it in the same spirit as an Area Agency on Aging brochure.
Add One Line to the Admission Financial Screen
Most admission packets ask about income sources, bank accounts, real property, burial arrangements, and long-term care insurance. Very few ask about life insurance in a way that produces a useful answer, and the ones that do usually ask a yes-or-no question that families answer with a burial policy and move on.
The question that works asks for two facts: does the resident own life insurance, and what is the death benefit. Add a follow-up for whether premiums are currently being paid and by whom. Families who answer yes to a six-figure death benefit are describing an asset worth screening. Families who answer with a $5,000 final expense policy are not, and you have spent ten seconds finding out.
Train the intake conversation to ask for the policy cover page — the declarations page showing carrier, policy type, face amount, and issue date. It is the one document that answers everything, and families can usually find it faster than a bank statement.
Why It Matters to Your A/R
Two recurring situations in Illinois skilled nursing.
First, the pending application. Illinois has a long-standing history of extended processing times on long-term care Medicaid applications, and during that pendency the facility is either collecting private pay or carrying a balance. A resident with a $250,000 universal life policy sitting unexamined has a resource that could cover months of that gap; the same resident whose family lets the policy lapse for non-payment has nothing.
Second, the countable-resource problem. Under the standard rules, life insurance is disregarded only when total face value across all policies is $1,500 or less; above that, cash surrender value counts as a resource. That means a policy is frequently the specific thing standing between the resident and eligibility — and the family’s instinct is either to surrender it for the carrier’s figure or to sign it over to a child, which under the 60-month look-back can create a transfer penalty that lands right back on your A/R. A documented arm’s-length sale at fair market value avoids that problem and typically produces more than surrender would.
| Payer Stage | Who Pays | Where the Gap Appears | Where an Unneeded Policy Can Help |
|---|---|---|---|
| Qualifying hospital stay | Medicare Part A | Observation status does not qualify for SNF benefit | Family needs private-pay funding from day one |
| SNF days 1-20 | Medicare Part A in full | None, if the stay qualifies | Time to start a 60-120 day settlement review |
| SNF days 21-100 | Medicare with daily coinsurance (confirm 2026 amount with CMS) | Coinsurance unless a supplement covers it | Proceeds cover coinsurance and incidentals |
| After day 100 | Private pay, LTC insurance, or Medicaid | The classic cliff | Bridge funding while eligibility is pursued |
| Medicaid application pending | Private pay in practice | Illinois processing delays are well documented | Proceeds cover the pendency months |
| Medicaid approved | HealthChoice Illinois MLTSS | Resource limit (raised to $17,500 in 2023; confirm 2026) | Policy CSV over the $1,500 face-value threshold is countable and must be addressed |
Illinois Rules the Business Office Should Know
Three facts worth having on hand when a family asks.
The program. Illinois runs long-term care Medicaid through HealthChoice Illinois managed long term services and supports, with home and community based services largely under the Community Care Program. Eligibility is determined by the Illinois Department of Healthcare and Family Services.
The asset limit. Illinois raised its individual countable-asset limit from $2,000 to $17,500 in 2023, one of the most generous figures in the country. As of 2026, confirm the current limit and the community spouse resource allowance with HFS before quoting anything to a family. Our overview of Illinois Medicaid asset and income limits keeps the framework in plain language.
The Medicare cliff. Medicare Part A covers at most 100 days of skilled nursing per benefit period following a qualifying inpatient hospital stay, with full coverage only through day 20 and a substantial daily coinsurance from day 21 through day 100 — as of 2026, confirm the current coinsurance amount with CMS. Business offices know this schedule better than anyone, because day 21 is when the family’s understanding of who pays collides with reality.
What a Screenable Policy Looks Like
Not every policy is worth anything to the secondary market, and setting expectations correctly is part of keeping the facility’s credibility intact. The general profile:
- Insured roughly 70 or older, or any age with a material adverse change in health since the policy was issued.
- Death benefit of $100,000 or more. Below that, institutional buyers generally do not underwrite.
- Permanent coverage — universal life, guaranteed universal life, or whole life — or convertible term where the conversion privilege has not expired.
- Premiums current, or at least the policy still in force and not in a grace period that is about to close.
The final expense and burial policies that make up most of what business offices see do not clear these thresholds. The converted group policy from a long-retired factory job frequently does.
How the Family Gets an Answer
The facility’s role ends at handing the family information. From there the process is the family’s, and it costs them nothing:
- The family sends the policy cover page, redacted as they wish, with the policyowner’s permission.
- A free review comes back in about one to two business days with a straight answer on whether the policy is a realistic candidate.
- If they want an indicative range, four documents: cover page, current in-force illustration, latest carrier statement, and a signed HIPAA authorization the policyowner can revoke.
- A standard file runs roughly 60 to 120 days from submission through funding — which is why a family facing a day-100 Medicare cutoff should start the conversation early rather than at the cliff.
- Funds are handled through independent escrow, and ownership transfers only after payment is confirmed. The family can stop at any point with no obligation.
Historically, market-wide, sellers have received on the order of 10% to 35% of face value, and the federal Government Accountability Office study of the market (GAO-10-775) found settlements averaging roughly 4 to 8 times what surrender would have paid. Nobody can quote a specific policy without reviewing it. Families can call (305) 209-7183 or read our Education Center and our comparison of a life settlement versus surrender.
Educational only. Not legal, tax, or financial advice, and not an offer to purchase any policy. Illinois transactions are governed by the Illinois Viatical Settlements Act, 215 ILCS 158, administered by the Illinois Department of Insurance.
Script the Conversation, Then Get Out of It
A workable script for admissions or business office staff sounds like this: “One thing families sometimes miss — if your mother owns a life insurance policy with a death benefit over $100,000 that the family no longer needs, it may have value beyond what the insurance company would pay to cash it in. That’s not something we handle or have any interest in, but here is information you can look at with your own advisor.”
Then stop. Do not estimate a value, do not tell the family what to do with the money, and do not fill out any part of the process for them. Note in the record that educational material was provided at the family’s request, the same way you would note that a Medicaid application packet was given. The facility’s interest is that the resident’s care is funded and the family made an informed decision — nothing beyond that.
Frequently Asked Questions
Can the facility receive a referral fee for sending families to a settlement company?
No, and Pine Lake does not pay facilities or their staff. Federal fraud and abuse rules and state licensure standards give facilities strong reasons to avoid compensation arrangements with financial vendors, and any company offering a facility payment for resident referrals should be declined. The appropriate role is providing neutral educational material at the family’s request, the same as with Medicaid application resources.
What question should we add to the admission packet?
Ask whether the resident owns life insurance, what the death benefit is, and whether premiums are currently being paid and by whom. A yes with a death benefit over $100,000 is worth the family looking into; a small final-expense policy is not. Asking for the policy cover page is the fastest way to get a usable answer.
Why does the policy matter to a Medicaid application?
Under the standard rules, life insurance is disregarded only where total face value across all policies is $1,500 or less; above that, cash surrender value is a countable resource that has to be addressed before eligibility. Families often respond by surrendering the policy for the carrier’s figure or signing it over to a child, and the second option can create a transfer penalty under the 60-month look-back. A documented arm’s-length sale at fair market value generally avoids that and typically produces more cash.
What is Illinois’s asset limit and who determines eligibility?
Illinois raised its individual countable-asset limit from $2,000 to $17,500 in 2023, one of the most generous in the country, with eligibility determined by the Illinois Department of Healthcare and Family Services and coverage delivered through HealthChoice Illinois MLTSS and the Community Care Program. As of 2026, confirm the current limit and the community spouse resource allowance with HFS before quoting figures to a family.
How long does a settlement take, and does that fit our timeline?
A standard file typically runs about 60 to 120 days from submission through funding. That is why the conversation belongs at admission or early in a Medicare-covered stay rather than at the day-100 cliff. Families who start at the cliff are usually too late for the proceeds to cover the transition.
Which policies are actually worth a family’s time?
Generally an insured around 70 or older, or any age with a significant health change since issue, a death benefit of $100,000 or more, and permanent coverage — universal life, guaranteed universal life, whole life — or convertible term whose conversion privilege has not expired. Converted group policies from a former employer are the most commonly overlooked candidates. Burial and final expense policies almost never clear the threshold.
How much do families typically receive?
Market-wide historical figures put settlements at roughly 10% to 35% of face value, and the federal Government Accountability Office study (GAO-10-775) found averages of about 4 to 8 times what surrendering to the carrier would have paid. Individual results depend on the insured’s age and health, the policy type, and the premium required to keep it in force. No one can quote a number without reviewing the actual policy.
What should staff say, and what should they avoid saying?
Staff can say that a policy the family no longer needs may have value beyond its cash surrender value and offer educational material for the family to review with their own advisor. Staff should not estimate a value, advise on what to do with proceeds, complete any part of the process, or recommend a specific company as the right choice. Document that material was provided at the family’s request, and leave the decision entirely with the family.
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Related Reading
- Life Settlement Vs Surrender
- What Policies Qualify For Life Settlement
- How It Works Policy Options
- Education Center
- Illinois Medicaid Asset Income Limits
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.