The most common source of unrecognized private-pay runway in a resident’s file is a life insurance policy nobody asked about at admission. It does not show up on a bank statement, it is not on a benefit verification, and families rarely volunteer it because they think of the policy as a funeral plan rather than an asset. By the time it surfaces, the account has often already gone to Medicaid pending — or to bad debt.
The operational fix is one line in the financial-resources section of the admission packet: does the resident own life insurance with a death benefit over $100,000, and if so, who owns it and who pays the premium? That question costs nothing to ask and occasionally changes the entire payer path for a stay. In Indiana it matters more than usual, because long-term care Medicaid runs through Indiana PathWays for Aging — the managed LTSS program launched in 2024 — where an individual applicant faces a $2,000 countable-asset limit as of 2026, and a policy with cash value has to be resolved before eligibility anyway.
Send us a redacted policy cover page. With the family’s permission, that one page is enough for a free read, usually back within one to two business days, with no obligation to the facility or the family. Call (305) 209-7183.
In This Article
One Line in the Admission Packet
Most financial-resources sections ask about income, bank accounts, real property, burial funds, and long-term care insurance. Life insurance either gets no line at all or a bare yes/no that no one follows up on. Adding three fields — carrier, approximate death benefit, who pays the premium — is the whole change, and it fits on the existing form.
What you are screening for is narrow: permanent coverage (whole life, universal life, guaranteed universal life) or convertible term, with a death benefit of $100,000 or more, that nobody is depending on. A $10,000 final-expense policy is not this conversation. A $250,000 universal life contract the resident bought in 1994 and has been paying on quietly ever since is exactly this conversation, and it is more common in this population than most business offices expect.
Why It Shows Up as an A/R Problem
The pattern is familiar. A resident admits private pay or on a Medicare Part A stay, the family expects Medicaid to pick up seamlessly, and the application stalls — often on an asset the family did not think of as an asset. Meanwhile days accrue at private rate with no funding source identified, and the balance ages into a category nobody wants on the report.
An unneeded policy is one of the few remaining items in that fact pattern that has real value and is not already pledged to something else. Either the family lets it lapse and the value evaporates, or it gets converted — by surrender or by sale — into cash that funds care and clears the resource test. Both paths help the account. Only one of them tends to produce a materially larger number, since industry-wide ranges commonly cited for settlements run roughly 10% to 35% of face value and the GAO’s 2010 study (GAO-10-775) found proceeds well above cash surrender value.
The Boundary: Education, Not Endorsement
This has to be handled as information the business office can hand a family, not as a facility recommendation. No endorsement, no referral fee, no compensation of any kind flowing to the facility or to any employee, and no steering of the family toward a particular provider. If a facility ever accepted payment tied to a resident’s financial transaction, the compliance and resident-rights problems would dwarf any benefit, and residents have a right to make their own financial decisions free of facility pressure.
The defensible version is straightforward. The family is told an option exists, given something neutral in writing, told to get independent advice, and left to decide. Document that the information was provided and that the decision was the family’s. That is the same posture business offices already use for Medicaid application assistance and for referrals to elder law counsel.
| Admission-packet signal | What it usually means | Business office action |
|---|---|---|
| Resident owns permanent coverage, $100k+ face | Cash value is likely countable against the $2,000 PathWays for Aging limit | Flag for the Medicaid application; give the family neutral information |
| Adult child has been paying the premium | Family is carrying a cost they may drop under pressure | Raise it before the grace period runs |
| Policy is small final-expense coverage | Usually below the threshold that has market value | No action; note it as a burial resource |
| Resident holds a Partnership long-term care policy | Dollar-for-dollar asset disregard may apply | Flag to whoever handles eligibility before touching other assets |
| Medicare day 21 approaching with no plan | Coinsurance starts; private-pay exposure begins | Have the funding conversation now, not at day 95 |
| Family says they are cancelling the policy | Value is about to be destroyed rather than converted | Note that alternatives exist; refer them to independent advice |
Where This Fits Against Medicare’s 100-Day Ceiling
Business offices live with the arithmetic: Medicare Part A covers a maximum of 100 days of skilled nursing per benefit period after a qualifying inpatient hospital stay, with a substantial daily coinsurance applying from day 21 through day 100 — verify the current 2026 coinsurance amount, which CMS adjusts annually. Observation status defeats the qualifying-stay requirement entirely, which is its own conversation with families.
The relevant point for this page is what happens at the end of that window. On roughly day 21 and again around day 100, a family suddenly faces a private rate with no plan. That is precisely when an old policy is most valuable and most likely to be abandoned, because premium payments are one of the first things a family stops when cash gets tight. Asking the question at admission, not at day 95, is what makes the option usable.
Indiana Rules Worth Knowing at the Front Desk
Two Indiana specifics belong in a business office’s working knowledge. First, settlements are governed by Indiana Code Chapter 27-8-19.8 and regulated by the Indiana Department of Insurance, which licenses providers and brokers and sets required owner disclosures — so a family asking whether this is a regulated transaction can be told yes, and pointed to the Department.
Second, Indiana runs one of the country’s original Long Term Care Insurance Partnership programs, which gives dollar-for-dollar asset disregard for benefits paid by a qualifying policy. If a resident’s file shows a Partnership long-term care policy, that changes the resource picture materially and should be flagged to whoever is handling the Medicaid application before any other asset is touched. Confirm current thresholds with the Department of Insurance.
A Simple Handoff Script
Business office staff are not financial advisors and should not sound like them. A workable script is short: “Some families in this situation find they own a life insurance policy they no longer need. That policy may have value beyond what the insurance company would pay to cancel it. Here is some general information — it is not advice, and you should talk to your own attorney or advisor before doing anything.”
Then stop. If the family wants to look into it, they contact a provider directly; the facility does not submit anything, does not sign anything, and does not receive anything. Our comparison of a life settlement versus a surrender is written for families and is a reasonable thing to hand over.
How a Referral Works
With the family’s permission, the only document needed to start is the policy cover page — carrier, product type, face amount, issue date. Personal identifiers can be redacted. The read is free, typically returned in one to two business days, and no one is obligated to anything.
Cases that price well share a profile: an insured roughly 70 or older, or any age with a material health change; a death benefit of $100,000 or more; and permanent, guaranteed universal life, or still-convertible term coverage. From there, four documents produce an indicative range — cover page, current in-force illustration, latest carrier statement, and a signed HIPAA authorization. A standard file runs roughly 60 to 120 days from complete documentation through funding, which is why the admission-day question matters more than the day-90 question.
The family stays in control and can stop at any point before closing. Call (305) 209-7183 or send the cover page for a free review.
This page is educational only and is not legal, tax, or investment advice for you or the people you serve. Pine Lake Life Solutions does not provide legal, tax, or clinical counsel, and nothing here is an offer to purchase a policy; independent counsel should review any transaction before it is executed.
Frequently Asked Questions
Can the facility receive a fee for referring a resident’s policy?
No, and it should not. Any compensation tied to a resident’s financial transaction creates resident-rights and compliance exposure that far outweighs any benefit. The correct posture is neutral information handed to the family, with the family making an independent decision and no money flowing to the facility or staff.
What exactly should be added to the admission packet?
One line in the financial-resources section asking whether the resident owns life insurance with a death benefit over $100,000, plus fields for carrier, approximate face amount, and who pays the premium. That is enough to screen. Anything more detailed starts to look like financial intake, which is not the business office’s role.
Does the policy have to be resolved before Medicaid eligibility in Indiana?
If the total face value across all policies on the resident exceeds the small-face-value disregard, generally $1,500, the cash surrender value is a countable resource. Against Indiana’s $2,000 individual limit under PathWays for Aging as of 2026, that usually has to be dealt with one way or another. Confirm current treatment with FSSA.
How long does a settlement take, and does that fit our A/R timeline?
A standard file runs about 60 to 120 days from complete documentation through funding. That is too slow to rescue an account discovered at day 95 and about right for one identified at admission, which is the practical argument for asking the question up front.
What if the resident lacks capacity to sign?
Then the authority question comes first. A properly authorized agent under a durable power of attorney, or a court-appointed guardian, may need to act, and a guardian typically needs court authorization to sell a protected person’s asset. That is a legal question for the family’s counsel, not something the business office should resolve.
Who regulates these transactions in Indiana?
Indiana Code Chapter 27-8-19.8 governs life settlements, and the Indiana Department of Insurance regulates providers and brokers, licensure, and required disclosures. Families asking whether the transaction is regulated can be told yes and pointed to the Department.
Does this replace a Medicaid application?
No. It is a funding option that may extend private pay or clear a countable resource; the eligibility work still has to be done by the family, their counsel, or whoever assists with the application. The two run in parallel and should be coordinated on timing.
What if the family just wants to keep the policy?
That is a legitimate choice and the facility should not push against it. Some families genuinely need the death benefit. The point of the admission question is to surface the asset so the decision is made deliberately rather than by default when premiums stop.
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Related Reading
- Life Settlement Vs Surrender
- How It Works Policy Options
- Indiana Medicaid Asset Income Limits
- Life Settlement Licensing Indiana
- Education Center
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.