Owning life insurance does not automatically disqualify you from New York Medicaid. Term insurance generally has no cash surrender value, so it generally does not count. A policy that does have cash value, such as whole life, counts as a resource once the combined face value of your policies on the same insured is more than $1,500, and the cash value is then added to your other countable assets.
Does life insurance count against Medicaid eligibility in New York?
It depends on the cash surrender value, which the Department of Health’s Medicaid Reference Guide defines as the amount the insurer pays if the policy is cancelled before death. The guide says a life insurance policy is a resource if it generates a cash surrender value, and its value as a resource is that amount.
For SSI-related applicants, which in practice means people applying on the basis of age, blindness or disability, a policy is an excluded resource if its face value, together with any other policies the person owns on the same insured, totals $1,500 or less. Face value means the basic death benefit. It does not include dividends or extra amounts payable for accidental death.
| Policy | Cash value? | How the guide treats it |
|---|---|---|
| Term insurance | Generally none | Not a resource if it has no cash surrender value |
| Ordinary (whole) life | Usually, after about the second year | Cash value counts if combined face value is over $1,500 |
| Limited payment life, endowment | Generally yes | Same as whole life |
| Any policy with combined face value of $1,500 or less | May have some | Excluded for SSI-related applicants |
One exception to remember: the guide says some newer types of term insurance have a cash value, and if the agency knows of a term policy with one, it is treated like an ordinary life policy.
How is whole life cash value counted?
Once the $1,500 face-value line is crossed, the entire cash surrender value is counted, not just the amount above it. Loans taken against the policy reduce the cash surrender value, and accumulated dividends increase it.
Here is how the rule works with made-up numbers, to show the mechanics.
| Example policy | Face value | Cash value | Counted toward the resource limit? |
|---|---|---|---|
| Term, 20-year, no cash value | $100,000 | $0 | No |
| Small policy | $1,500 | $900 | No, face value is within $1,500 |
| Whole life | $10,000 | $4,200 | Yes, $4,200 |
| Two small policies on the same person | $1,000 + $1,000 | $600 + $700 | Yes, face values total $2,000, so $1,300 counts |
The guide adds that the availability of an accelerated benefit, such as a payout after a terminal diagnosis, is not itself a resource. But cash paid out is income in the month received and a countable resource if kept into the next month.
What are the 2026 Medicaid limits for home care?
Home care is community-based long-term care, so the resource test applies. The state’s 2026 chart, effective January 1, 2026, lists these figures for people applying on the basis of age or disability.
| Household | Resource limit | Monthly income level |
|---|---|---|
| 1 person | $33,038 | $1,836 (138% of the federal poverty level) |
| 2 people | $44,796 | $2,489 |
For a married couple where one spouse needs long-term care, the community spouse may keep resources equal to the greater of $74,820 or the spousal share, up to $162,660, according to the same chart. The source is the Department of Health’s 2026 income and resource standards chart, revised February 5, 2026, which accompanies the January 2026 notice GIS 26 MA/03. Income above the level does not always end the process; see Medicaid spend-down and pooled income trusts.
What can I do if a policy puts me over the limit?
Do not cancel, give away or cash out a policy before you know how it is counted. A transfer for less than fair market value can create a penalty, and a surrender can turn cash into a countable resource.
- Get the numbers from the insurer. Ask for the policy type, face value, cash surrender value and any outstanding loan, in writing.
- Add everything together. Combine the face value of every policy on the same insured. Then add the cash value of the policies that count to your bank accounts and other resources.
- Check whether consent is needed. The guide says if another person’s consent is needed to surrender a policy and cannot be obtained, the policy is not counted.
- Consider a burial plan. An irrevocable pre-need funeral agreement is not an available resource, and paying fair market value for it is not a penalized transfer, according to the Department of Health’s ADM 11 OHIP/ADM-4. One agreement covers the applicant and family members, and buying more than one may make the extras count as transfers.
- Use the cash value on a supplemental burial fund where allowed. If the policy’s cash value is counted, the guide describes using it to bring a funeral agreement’s non-burial items up to $1,500, with the balance still counted but earmarked for burial. The same notice allows a separate burial fund of up to $1,500 ($3,000 for a couple) for non-burial items in some cases.
- Talk to an elder-law attorney or a Medicaid specialist before you act, especially if a spouse or a large sum is involved.
What will Medicaid ask for about my policy?
The guide says the policy itself generally gives all the information needed. If it does not, the caseworker contacts the insurer, the agent or the employer’s payroll office for group insurance. Have these ready: the insurance company, the owner, the insured, the policy number, the type of insurance, the cash value, the face value, and any loans. Caseworkers verify when an applicant indicates life insurance or premium payments, union membership, fraternal organization membership, or veteran status.
The Department of Health’s life insurance page in the guide was last updated in June 2010, and 2026 limits have changed since. Ask your caseworker if anything in the guide seems out of date. Our page on how Medicaid covers home care explains the wider process, and our home care cost guide compares private pay.
Benefits older New Yorkers often miss: advice from our nurse director
Anna Klyauzova, RN, MSN, MPA, Director of Patient Services at ProLife Home Care, on what she sees in practice:
Families often haven’t heard of the Medicare Savings Programs, Extra Help with prescription costs, SNAP, or HEAP for heating bills. Many never check Medicaid or home care eligibility because they assume their income is too high.
If you don’t know what you qualify for, start with what is on the table: insurance, income, benefits already received and the person’s care needs. You don’t have to fill out a dozen applications this week. First find out which programs fit. NYC Aging, NY Connects and Medicaid specialists are good places to ask, and hospital Medical Social Services can help in tricky situations. We help families understand their home care options in Brooklyn and Queens and send them to the right specialist for the rest, so nobody has to sort it out alone.
We are a licensed home care agency in Brooklyn and Queens (New York State Department of Health licence #2572L001). We are not a Medicaid or legal adviser, but we can talk through the care side. Call (718) 232-2777 or use our contact page.
Medicaid rules change and individual cases differ. Everything above was checked on 9 October 2026 against the New York State Department of Health’s Medicaid Reference Guide and its 2026 income and resource standards chart. The Department’s site blocks automated readers, so the documents were read through its mirror site. Confirm your own situation with your local Medicaid office or an elder-law attorney.
Frequently asked questions
Does a term life insurance policy count as an asset for NYC Medicaid?
Generally no. The Department of Health’s guide says term insurance generally has no cash surrender value, and a policy is a resource only if it has one. Some newer term products do have cash value, and those are treated like ordinary life policies.
Does whole life insurance count for Medicaid in New York?
Its cash surrender value counts if the combined face value of your policies on the same insured is more than $1,500. At $1,500 or less, the policy is excluded for SSI-related applicants.
What is the Medicaid resource limit in New York in 2026?
The state’s 2026 chart lists $33,038 for one person and $44,796 for two. The monthly income level in the same chart is $1,836 for one person and $2,489 for two.
Should I cancel my life insurance to qualify for Medicaid?
Not before you know how it is counted. Surrendering a policy can turn it into cash that is a countable resource, and giving it away for less than fair market value can cause a penalty. Ask a Medicaid specialist or elder-law attorney first.
Does a burial policy or funeral plan count?
An irrevocable pre-need funeral agreement is not an available resource, according to the guide. A burial policy that is simply a life insurance contract with cash value is treated under the life insurance rules.
Do I have to report my life insurance policy on the Medicaid application?
Say so. The guide tells caseworkers to verify policies whenever an applicant indicates life insurance or premium payments, and the policy details are what they use to decide how it is counted.
Does life insurance count as income?
Not by itself. Premiums and cash value are about resources. The guide says accelerated death-benefit payments, if you receive them, count as income in the month received.
