A Prepaid Funeral Plan Should Be Part of Your Medicaid Spend-Down


For many elders and their family members, figuring out how to pay for quality long-term-care is a serious challenge. For decades, Medicaid has been an important source of assistance for families who require long-term care services but have limited assets and income. To qualify for Medicaid, one must meet specific eligibility requirements, the most stringent of which are financial limitations.

As part of the qualification process, a financial “snap shot” is taken of an applicant’s estate to determine if they meet certain asset and income limits. If the applicant’s assets exceed the limit, they will need to go through the spend-down process in order to reduce their non-exempt assets until they are under the eligibility threshold.

Certain possessions are considered exempt and therefore are not subject to the spend-down process. Assets including a home, certain personal effects, cemetery property and a prearranged funeral plan are exempt for Medicaid qualification purposes.

In most states, a person can prearrange certain aspects of their funeral for any amount of money using an irrevocable trust or funeral contract. Funds can also be set aside for funeral expenses using a designated revocable account and/or a life insurance policy. Because the applicant can still access this money, in many states the total of these revocable funds cannot exceed $1,500 in order to be considered exempt.

Medicaid laws vary widely by state. Many do have limitations on the amount of money that can be spent on preplanning a funeral and how these funds are set aside. To make sure that your loved ones are taking the right steps to protect their assets and ensure their eligibility for Medicaid, contact a reputable elder law attorney, a certified financial planning professional or your local Medicaid office for assistance with planning.

Molly Gligor leads the Houston area network of Dignity Memorial® funeral, cremation and cemetery providers. As a licensed funeral director for the past 20 years, she has assisted thousands of families during difficult times, helping them celebrate the significance of lives that have been lived and preserving memories with dignity and honor.

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The information provide in this article is 'common knowledge' for quite a few that have followed this site. I would not rely on the "local Medicaid office for assistance....". They are, after all, government run and funded entity. The laws are complex, and like the IRS, the information required from those 'involved' is skewed. Just search the HHS.gov site and then your State of residence. The rules for each change annually; so if you are 'planning' now, who's to say it will work next year..........NO ONE that's who. As I am fond of saying......."Love my country, FEAR my government."
When I was planning my Mom's funeral - she's on medicaid - I was told that if I put more in her "savings account" with the crematorium than was required, the state would take any remaining funds.