'Death benefit' vs. 'life insurance'

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Q. My mother is a Postal Service retiree residing in a nursing home. She had to use up all of her own assets to pay the nursing home until she qualified for Medicaid. Now, she has nothing left. I’ve been told that as a retired postal worker, when her time comes, there is a Postal Service “death benefit” that will pay out to her beneficiaries and that Medicaid cannot take that money from her estate because it is technically a “death benefit” as opposed to “life insurance.” Is this true?

A. I’ve never heard of such a death benefit and don’t believe there is one. That leaves only two possibilities. First, your mother has a Federal Employees’ Group Life Insurance policy that, at her death, would be paid to whomever she designated on a Standard Form 2808 (CSRS) or 3102 (FERS). If she didn’t make such a designation, the money would be paid out according to the standard order of precedence. Second, if all of the money she contributed to the retirement system had not been returned to her in her annuity payments when she dies, any residual amount would be paid out according to the standard order of precedence.

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