Do Life Insurance Proceeds Affect Medicaid? 
In order to receive Medicaid , the potential recipient must show that they have very low income and very low assets . The level of assets can not go up beyond the maximum allowed amount or Medicaid eligibility will be jeopardized . If life insurance proceeds are received by being the beneficiary of a policy , those proceeds will be counted as income in the month that it was received . Once the benefit is spent , Medicaid eligibility will be returned . Consult a tax attorney and your social worker to see if there are legal ways to deal with your inheritance that are more favorable to you . 