What is the name of your state? colorado
What is the name of your state?
I'm writing in regards to my parents. They live in southern Colorado. My mom is receiving old age pension, and medicaid/medicare. My dad is receiving social security. Several years ago, they purchased a life insurance policy for $25,000. The social services department told them they had to drop the policy, get the cash value of it, and spend it on their home or my mom would not receive her benefits anymore as this is considered a resource. However, this was after she had already starting receiving the benefits. Is this legas since it was their mistake? They cashed it out and paid off the house, but lost out on a lot of money from the policy. Now, they are in the process of selling their home. The social services department is now telling them that after the home is sold, and a new home is purchased, that the remainder of the proceeds goes to the state of colorado since my mom has been receiving all of these benefits all of this time. If they don't give the money to the state, she will lose her old age pension and the Medicaid she receives. This does not sound kosher to me. I am in the process of reviewing the policies and regulations. However, I would like to know if this is correct and would the next steps are. If this is true, I would like to know what other options they have to preserve the house money as they are NOT wealthy and have been paying on their home for years. What happens if they get the money and spend it or give it to their kids? Will there be any kind of penalties or lawsuits??