My parents have never had money, have a mobile home worth about $3,000 and own an old car -- that's it.

Mom is in a nursing home on medicaide. Thankfully that has been an option as she is not well. I thank God for that.

My Dad just passed away suddenly and to our surprise had a $27,000 life insurance policy.

Any idea what is going to happen? Will mom be able to continue on medicaide and they take the life insurance? Or will mom need to come off of medicaide and revert to paying the full nursing home amount?

Anyone know so I can brace mom for what is about to happen?

I'd suggest talking to a social worker at your mother's nursing home or someone in her doctor's office. They are usually pretty up-to-date on the regulations surrounding those types of situations.

This article might help:
http://www.estate-planning-hub.com/effect-of-life-insurance-proceeds-on-medicaid-eligibility.html

Since you are only eligible for Medicaid if you have less than $2000 in assets, it sounds like she will need to spend through the $27K before she can reapply for Medicaid coverage. Luckily there are a few options for spending the money besides just handing it over to the nursing home, as outlined in the article.

I personally am not opposed to giving the nursing home the $27,000. They have provided excellent care. Mom wouldn't be alive if not for them. Mom is going to freak out as to not having access to the money.

I am just curious about the possible outcome. I will call medicaide tomorrow to get futher details.

Will post info as I get it. Thanks all!!!!!

She can likely stay on Medicaid but the state will probably go after the money as reimbursement for her care already provided by Medicaid. I would talk to nursing home social worker ASAP. I know in Iowa you can retain some life insurance monies for future funeral expenses - may be worth taking some cash from the life insurance and prepaying that. Also I believe you can pay off any debts your father left with life insurance monies first.