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.