The operational change this page is asking for is one line in the financial-resources section of your admission packet: does the resident own life insurance with a death benefit over $100,000? That question costs nothing to ask and occasionally identifies an asset large enough to cover the gap between the day private funds run out and the day a Medicaid application is approved.
You already know the pattern. A private-pay resident’s family assured you the funds would last. Three months in, the check stops. The application goes in, the Medicaid-pending days accumulate, and some of them never convert. Meanwhile the family is paying premiums on a policy nobody has thought about in years, or letting it lapse because they cannot afford both.
In Michigan, that policy is also an eligibility problem: the state disregards life insurance only when total face value is at or under $1,500, so above that the cash value counts against the $2,000 individual countable-asset limit for long-term care Medicaid (as of 2026 — confirm current figures with MDHHS). A sale, where the policy qualifies, addresses the resource and creates the bridge at the same time. Referrals take one document: the policy cover page, with the resident’s or representative’s permission. Free review, one to two day turnaround, no obligation. Call (305) 209-7183.
In This Article
The AR Problem This Actually Solves
Look at your aging. The balances that turn into write-offs are rarely the ones that were always Medicaid; they are the private-pay stays that ran out of runway before eligibility was established. The family is not refusing to pay — they genuinely have nothing liquid left, and the application is sitting in queue.
A funding bridge of 60 to 90 days is frequently the entire difference between a converted Medicaid stay and a bad-debt entry. That is also, not coincidentally, roughly the timeline of a standard life settlement, which runs about 60 to 120 days from application to funding. Which is why the question belongs in the admission packet, not in the collections call three months later.
One Line in the Admission Packet
Add it where you already ask about bank accounts, annuities, and property:
- Does the resident own any life insurance? If yes: carrier, face amount, and policy type.
- Who pays the premium, and is it current? Premiums being paid by an adult child is the strongest signal that the coverage is unwanted.
- Is anyone still depending on that death benefit? Often the answer is no, and the family has never said it out loud.
Then flag the file if the death benefit is $100,000 or more and the resident is roughly 70 or older — or any age with a serious health change. That is the practical screen; see what policies qualify for a life settlement for the full version. Train admissions and social services to ask it the same way every time, and keep it informational: you are identifying resources, not advising on what to do with them.
Why Families Never Mention the Policy
Three reasons, all predictable. They think of the policy as untouchable — “that’s for the funeral” — without knowing that a portion of the benefit can sometimes be retained. They believe the only options are keep paying or let it lapse, because no one ever told them a third option exists. Or they have already surrendered it for cash surrender value and are surprised how little arrived.
The value gap is the part worth knowing. Federal market data (GAO-10-775) found settlements typically ran roughly 10% to 35% of face value — about four to eight times what surrender pays on average. Our page on cash surrender value explains the baseline, and settlement versus surrender puts them side by side in language families understand.
| Scenario | Typical Outcome Without a Review | What a Policy Review Adds |
|---|---|---|
| Private-pay funds exhausted before approval | Medicaid-pending days that may not convert | A 60–120 day funding bridge if the policy qualifies |
| Family cannot afford premiums | Policy lapses; value destroyed | Sale captures value before lapse |
| Policy surrendered to the carrier | Cash surrender value only | Settlements typically ~4–8x surrender value (GAO-10-775) |
| Policy transferred to a child | Transfer for less than fair market value | Documented arm’s-length sale avoids that characterization |
| Michigan life insurance disregard | Face value at or under $1,500 | Above that, cash value is countable (2026 — confirm) |
| Individual countable-asset limit | $2,000 for LTC Medicaid | Resource must be resolved either way |
| Screening threshold | Rarely asked at admission | $100,000+ death benefit, insured roughly 70+ |
The Michigan Medicaid Angle Your Application Already Cares About
Michigan long-term care Medicaid runs through MDHHS, including nursing facility coverage, the MI Choice Waiver, and MI Health Link, with a $2,000 individual countable-asset limit. Life insurance is disregarded only when total face value across all policies is at or under $1,500; above that line, cash value is a countable resource. Confirm both figures for 2026.
So a resident with a $150,000 policy carrying cash value is not eligible until that resource is dealt with. Surrendering solves the resource problem at the lowest possible value. A documented sale at fair market value solves it at a higher one and, critically, is not a transfer for less than fair market value under the 60-month look-back the way a gift to a family member would be. Details in our guide to Michigan Medicaid asset and income limits.
Staying Inside Your Role
Business office managers are not financial advisors, and this should never look like one. The defensible posture is narrow and easy to maintain:
- Identify, do not recommend. You are noting that an asset exists and that options exist for it.
- Hand over information, not a decision. Give the family written material and let them make the call with their own attorney or advisor.
- Take no compensation. No referral fees, no arrangements that could look like steering. This protects the facility more than anyone.
- Document consent. Nothing about a resident’s policy leaves your office without the resident’s or authorized representative’s permission.
- Respect resident rights and privacy. Financial discussions belong with the resident or their legal representative, handled under your existing privacy policies.
Michigan’s settlement framework sits in the viatical settlement provisions of the Insurance Code, historically cited at MCL 500.2077 et seq. (verify the current citation), administered by the Department of Insurance and Financial Services. If a family asks you to vet a company that contacted them, DIFS license lookup is the right answer — see life settlement regulation in Michigan.
Educational information for professionals only. Nothing here is legal, tax, financial, or benefits advice, and it is not a solicitation to residents. Families should rely on their own independent counsel.
Working It Into the Census and Collections Rhythm
Two touchpoints capture most cases. At admission, the packet question flags the file. At the 30-day financial review — or whenever the private-pay projection first shows a shortfall — the flag gets acted on, which is early enough for a 60 to 120 day process to land before the money runs out.
A third touchpoint is worth adding: the Medicaid application itself. If the application discloses life insurance above Michigan’s $1,500 face-value disregard, that is a policy already known to be a countable resource, and the family is going to have to do something about it regardless. That is the natural moment to hand them information about all of their options rather than letting the default outcome be a surrender or a lapse.
How a Referral Works
With the resident’s or authorized representative’s written permission, the family sends one document: the policy cover page — carrier, policy number, face amount, policy type, issue date. Nothing medical, nothing financial, and anything they prefer to redact can be redacted.
The review is free and carries no obligation for the family or the facility. An initial read typically comes back in one to two business days with a straight answer on whether the policy is a realistic candidate. To develop an indicative range, three more documents complete the file — a current in-force illustration, the latest carrier statement, and a signed HIPAA authorization. A standard file funds in roughly 60 to 120 days.
The family stays in control throughout and can stop at any point; nothing changes on the policy until they sign a purchase agreement and funds are placed in escrow. Call (305) 209-7183, or give families the Education Center as a starting point.
Frequently Asked Questions
What exactly should we add to the admission packet?
One question in the financial-resources section asking whether the resident owns life insurance with a death benefit of $100,000 or more, plus a follow-up on who pays the premium and whether it is current. Premiums being paid by an adult child is the strongest indicator that the coverage is unwanted.
Is this something a business office manager is allowed to raise?
Identifying that an asset exists and providing general information is an administrative function, not financial advice. Keep it informational, take no compensation of any kind, document the resident’s or representative’s consent, and let the family decide with their own attorney or advisor.
How does this help with Medicaid-pending days?
A settlement typically funds in 60 to 120 days, which is close to the window in which private-pay balances turn into bad debt. If the policy qualifies, the proceeds can fund care while the application is processed instead of the facility carrying days that may never convert.
Does Michigan count a resident’s life insurance?
Michigan disregards life insurance only when total face value across all policies is at or under $1,500; above that, cash value counts against the $2,000 individual countable-asset limit for long-term care Medicaid. As of 2026, confirm both figures with MDHHS.
Wouldn’t it be simpler for the family to surrender the policy?
Simpler, but usually worth far less. Federal market data found settlements typically ran about 10% to 35% of face value, roughly four to eight times cash surrender value on average. A free review costs the family nothing and establishes which option is actually better for their policy.
Can the family keep some of the death benefit?
Some transactions can be structured so a portion of the death benefit is retained for the family, which matters when funeral costs are the family’s main concern. Whether that is available depends on the policy and the specific offer, so it should be asked about during the review.
What does the facility have to send?
Nothing. With the resident’s or representative’s permission the family sends the policy cover page directly, and the facility’s role ends at handing over information. The review is free and neither the family nor the facility takes on any obligation.
Should we accept a referral fee?
No. Facilities should take no compensation connected to a resident’s financial transaction, both because it creates a steering appearance and because it converts an administrative courtesy into a conflict. Keep the relationship informational.
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Related Reading
- Life Settlement Vs Surrender
- What Policies Qualify For Life Settlement
- Cash Surrender Value Life Insurance
- Life Settlement Licensing Michigan
- Michigan Medicaid Asset Income Limits
- 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.