Critter Corner: Medicaid and Prepaid Funerals
Dear Angel,
We are considering whether to prepay for my husband’s funeral to lock in prices, to relieve the burden of family members during what will surely be a stressful time, and to ensure his personal wishes are carried out. He is in the early stages of dementia and will need nursing home care in future. Will prepaying for his funeral affect Medicaid planning?
Thanks!
Peri Arranged
—-
Dear Peri,
A prepaid funeral contract is a legal agreement that allows a person to pay now for funeral services that will be needed sometime in the future. This contract may include the funeral or memorial service and other related services. A prepaid funeral contract may be revocable or irrevocable. Irrevocable means the contract cannot be canceled. Only a properly-established irrevocable funeral contract is an exempt asset for Medicaid purposes.
Medicaid does not pay for funerals, but it does have rules that allow you to set aside money for your own funeral, burial, or cremation without having that money “count” as part of your assets when Medicaid determines your eligibility for long-term care coverage. Qualified funding vehicles, such as funeral insurance policies and trust accounts are allowed, provided they are irrevocable and non-refundable, and cannot ever be used for purposes other than funeral expenses. When the proper funding vehicles are used to prepay a funeral, the value of the prearranged funeral contract and the funding vehicle are excluded as a countable resource in determining SSI & Medicaid eligibility.
You can read more about this topic in our Prepaid Funeral FAQs.
Hope this helps!
Angel