STATE OF WISCONSIN
Department of Health Services
Division of Medicaid Services
1 West Wilson Street
PO Box 309
Madison WI 53707-0309
Telephone: 608-266-8922
Fax: 608-266-1096
www.dhs.wisconsin.gov
Date:
March 22, 2024 DMS Operations Memo 24-05
To:
Income Maintenance Supervisors
Income Maintenance Lead Workers
Income Maintenance Staff
Affected Programs:
BadgerCare Plus Caretaker Supplement
FoodShare FoodShare Employment
Medicaid and Training
SeniorCare
From:
Jonelle Brom, Bureau Director
Bureau of Eligibility Operations & Training
Division of Medicaid Services
Change in Face Value Determinations for Life Insurance Policies for Medicaid
CROSS REFERENCE
Medicaid Eligibility Handbook Section 16.7.5 Life Insurance
20 CFR § 416.1230
Wis. Stat.
§49.47(4)(b)2w
EFFECTIVE DATE
Immediately
PURPOSE
This memo announces a change in how the face value of life insurance is determined for purposes of the
asset test used for Medicaid eligibility.
BACKGROUND
Life insurance is a countable asset for Medicaid eligibility, except under certain circumstances. For a
person who is aged 65 years or older, blind, or disabled, the cash surrender value (CSV) of their life
insurance may only be counted as an asset if the total face value (FV) of all the person’s life insurance
policies with CSV is greater than $1,500.
Wisconsin statute 49.47(4)(b)2w defines the FV of a life insurance policy as “the basic death benefit of
the policy including the value of riders and other attachments.
However, federal Supplemental Security Income (SSI) policy at 20 CFR § 416.1230 defines the FV of a
life insurance policy as “the basic death benefit of the policy exclusive of dividend additions or
additional amounts payable because of accidental death or under other special provisions.”
DMS Operations Memo 24-05
March 22, 2024
Page 2 of 3
Because Wisconsin Medicaid must follow the SSI program’s financial rules and cannot have more
restrictive policies than federal law, Wisconsin is changing the policy for determining the FV of life
insurance to align with federal policy.
POLICY
Effective immediately, only the basic death benefit is counted when determining the face value (FV) of
a life insurance policy. Dividend additions and riders are not counted as part of the FV. The updated
policy is as follows:
The cash surrender value (CSV) of life insurance is a countable asset. However, there is a limited
exception to this rule: For a person who is aged 65 or older, blind, or disabled, the CSV of their life
insurance is only counted if the total FV of all life insurance policies owned by that person exceeds
$1,500.
The CSV is the amount that the insurer will pay upon cancellation of the policy before death of the
insured or before maturity of the policy. The FV is the amount that is contracted for when the life
insurance policy is purchased. It may be described on the policy as the “face value,” “amount of
insurance,” “amount of this policy,” “sum insured,” or a similar term.
For each person who is aged 65 or older, blind, or disabled, it must be determined if the total FV of all
life insurance policies owned by that individual is greater than $1,500. When the total FV is determined,
the following must not be included:
• The FV of any insurance policy that has no CSV, such as burial insurance and most term life
insurance.
• The value of any dividend additions. Dividend additions are increases in coverage purchased
using dividends generated by the policy. They are often referred to as "paid-up additions” or
"paid-up additional insurance.”
• Additional sums payable because of special provisions or riders. Riders are modifications the
policy owner adds to the life insurance policy at the time of purchase. A common example is
accidental death.
If the total FV of life insurance owned by a person who is aged 65 or older, blind, or disabled is $1,500
or less, the CSV of any life insurance policy owned by that person is an exempt asset, including the CSV
of any dividend additions.
For life insurance policies that cannot be excluded under the limited exception, the CSV of the policy,
including the CSV of any dividend additions, is a countable asset.
If the life insurance policy pays dividends in some form of available cash, such as an annuity, an annual
dividend check, or accumulating dividends in a separate interest-bearing account, these are treated as
separate assets from the life insurance. They must be valued individually.
DMS Operations Memo 24-05
March 22, 2024
Page 3 of 3
Example 1: Steve (aged 67) and Mary (aged 63) are married. Steve is applying for Medicaid. Both
individuals have whole life policies in which dividends are used to purchase additional coverage on the
policy (“paid-up additions”).
Policy
Owner
Face
Value
Cash Surrender Value
Dividends
Riders
Whole
life
Steve
$1,500
$6,700 (including CSV of
paid-up additions)
Used to purchase
additional coverage on the
policy
$25,000
accidental
death
Term
life
Steve
$250,000
$0
N/A
N/A
Whole
life
Mary
$1,500
$5,200 (including CSV of
paid-up additions)
Used to purchase
additional coverage on the
policy
$15,000
accidental
death
The total FV of life insurance policies owned by Steve is not greater than $1,500, so the $6,700 CSV of
Steve’s whole life insurance must be disregarded. As a reminder, the accidental death rider and Steve’s
term life policy are not counted when determining the total FV.
Mary is under the age of 65 and is not blind or disabled. Therefore, the limited exception does not apply
to her. Her whole life insurance policy’s CSV of $5,200 is a countable asset for Steve’s Medicaid
eligibility determination unless all or part of it can be excluded under other provisions, such as a burial
fund.
Example 2: Siobhan is disabled and has one life insurance policy. The dividends from her policy are
deposited into a separate, interest-bearing account.
Policy
Owner
Face
Value
Cash Surrender
Value
Dividends
Riders
Whole
life
Siobhan
$1,500
$545
Accumulated in a
separate account
($1,200)
N/A
The total FV life insurance policies owned by Siobhan is not greater than $1,500, so the $545 CSV of
the whole life insurance policy is not a countable asset. However, the $1,200 dividend accumulations
held in a separate, available account are treated as a separate asset from the life insurance.
CONTACTS
DHS CARES Problem Resolution Team
DHS/DMS/BEEP/EB
DHS/DMS/BEOT
