*** The Health Care Programs Manual (HCPM) has been replaced by the Minnesota Health Care Programs Eligibility Policy Manual (EPM) as of June 1, 2016. Please refer to the EPM for current health care program policy information. ***
Effective: December 1, 2006 |
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19.30.05 - Step 1 of Burial Fund Exclusion (BFE) Determination |
Archived: June 1, 2016 (Previous Versions) |
The first step in determining the Burial Fund Exclusion (BFE) is to review life insurance (LI) and life insurance-funded burials (IFB) that the client owns.
1. Total the Face Value (FV) of all non-term LI policies and/or IFBs the client owns.
Exception: If the client owns only an IFB and does not have LI, go directly to Step 2 - BFE Determination.
Example:
Sasha owns a LI with a FV of $10,000. She also converted an LI to an IFB three years ago. This burial has a FV of $12,000.
Action:
The total FV of all policies and insurance-funded burials is $22,000.
2. If the sum of the FV of all policies and/or insurance-funded burials is:
l Less than or equal to $1,500, the FV total must be applied toward the BFE of the person for whom the LI or IFB is insured for.
n Exclude the Cash Surrender Value (CSV) of life insurance policies.
n The remaining value of insurance funded burials, including services and cash advance items, is unavailable.
Example:
Sasha owns LI with a FV of $400. She purchased it for her son, Guido. Sasha also owns an LI policy for herself with a FV of $1,000. She does not own an IFB.
Action:
The total FV of the policies Sasha owns is less than $1,500.
The $400 FV of the LI purchases for Guido is less than $1,500. $400 must be applied to Guido’s BFE. Guido has $1,100 remaining of his BFE ($1,500 - $400 = $1,100).
The $1,000 FV of the LI purchased for Sasha is less than $1,500. $1,000 must be applied to Sasha’s BFE. Sasha has $500 of her BFE remaining ($1,500 - $1,000 = $500).
Example:
Glenn owns a LI with a FV of $200 and has an IFB with a FV of $1,300. The CSV of the LI is $1,000 and the IFB has a death benefit of $4,000.
Action:
Total the FV of the life insurance and the insurance funded burial. ($200 + $1,300 = $1,500) Because the total face value is less than or equal to $1,500, the $1,500 of FV must be applied to the BFE. The CSV of the LI is excluded and the remaining services listed in the IFB are unavailable.
Example:
Bob has no life insurance and an insurance funded burial with a FV of $1,000. The $1,000 is for services. The $1,000 FV is less than $1,500.
Action:
Because Bob does not have LI, go to Step 2 - BFE Determination.
Example:
Craig owns a life insurance policy with a FV of $500 and a CSV of $50. He has purchased this for his wife, Donna. Donna does not own any life insurance policies.
Action:
The total FV of the policy is $500 which is less than $1,500. Apply the FV of $500 toward Donna’s BFE. Donna has $1,000 remaining of her BFE ($1,500 - $500 = $1,000).
l Greater than $1,500:
n The CSV of life insurance policies is counted toward the client’s asset total.
n The IFB must be evaluated in Step 2 of Determining BFE.
Example:
Mario owns a LI with a FV of $10,000 and a CSV of $1,800.
Action:
The FV of the LI is greater than $1,500, so it cannot be designated to his BFE. Count the $1,800 of CSV toward Mario’s asset total. If Mario owns no other burials he may designate some of the CSV to the BFE. See Step 4 - BFE Determination.
Example:
Sarafina owns two life insurance policies and an insurance funded burial. LI policy one has a FV or $700 and a CSV of $200. LI policy two has a FV of $800 and a CSV of $600. The insurance funded burial has a FV of $1,000 and it includes a casket and a memorial service.
Action:
The total of the FV of all LI and IFB policies is $2500 ($700 + $800 + $1,000 = $2,500). $2,500 is greater than $1,500 so none of the policies’ FV can be designated to Sarafina's BFE. Count the CSV of the two LI policies toward Sarafina’s asset total. ($200 + $600 = $800) To determine if the IFB can be designated in another way, continue to Step 2 - BFE Determination.
Example:
Craig owns a life insurance policy with a FV of $5000 and a CSV of $400. He has purchased this for his wife, Donna.
Action:
The total FV of the policy is $5,000 which is greater than $1,500. Count the CSV amount ($400) toward Craig’s asset total.
3. Continue to Step 2 of Determining BFE. Do not use any life insurance policies or insurance-funded burials in the following steps that have been used to meet the burial fund exclusion.