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My mother needs Medicaid but is not eligible by $1800 in cash. She is too poor to buy prepaid funeral trust etc but could spend down $1500 by placing money in burial fund. However, I understand that Medicaid will not exclude Paid Upon Death accounts. So if you create a bank account for burial purposes, do you have to omit naming a beneficiary to avoid being a POD or will you be forced to go to probate to get the money for the funeral? Or is this an exception to the POD rule?

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A funeral trust is not an insurance policy. For me I cashed in a policy. But it can be the extra money that needs to be spent down.

The State of NJ allows 2k in a bank account. This is the amount you spend down to. So Mom has 3k, you need to get rid of the 1000. Worried corrected me. Here is what NJ Medicaid will contribute to a recipients funeral if they have no money:

"New Jersey will pay up to $2,246 in funeral costs and $524 in burial costs or crematory expenses for a deceased welfare recipient who is two year of age or older. Families are permitted to supplement these amounts up to $1,570. SSI and Medicaid allow you to set aside money for funeral arrangements in a prepaid trust if you expect you will become eligible for SSI or Medicaid within the next six months. Contact your county Board of Social Services."

I think the best thing you can do is call your County Social Service Dept and ask them how you can put aside the extra money. You have the basic info so it will help you to ask the right questions.
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For those that say this can't be done, We did this for my Mom here in GA. The financial person at the nursing home instructed us to do this to spend down mom's money. I'm thinking it's about $4500 in the account. We already had a prepaid funeral trust but it wasn't for the full allotted amount because my mom will be cremated.

This is set up in a way to avoid probate because my mom has no other assets and it would've been a pain to go through probate for just this.
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I don't understand "she is too poor to buy a funeral trust". Is there a minimum cost?

What we did was talk to the mortuary. They knew how to set up the trust and we could put as much as we wanted into it. We were told that when services were needed, we would lose any funds we didn't use. Maybe there is a minimum and they just didn't mention it to us.

Call a couple funeral homes/crematories and ask if they can set up a small irrevocable funeral trust. It has to be irrevocable to be Medicaid approved. But we were told we could transfer the trust to another funeral home if we want to.

Good luck. And her stimulus check doesn't count as an asset for the next eleven months, so if that's part of the $1800, that should help you.
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ElvaFe May 8, 2020
Yes, the $1200 stimulus check will not be counted. But, my case is different than yours. I am talking about a low income person who does not have life insurance , a home or cash above $3000 and receives only $975 in income. Nothing else. This type of person is still considered to have too many assets for Medicaid. I have to spend it down. When I mentioned $1800, it is part of her $3000 total. Medicaid adds both the checking and savings bal. So, under the Medicaid laws, monies held in a funeral trust, a prepaid plan or A SEPERATE BANK ACCOUNT CLEARLY TITLED "FOR FUNERAL/ BURIAL EXPENSES OR FUND with up to $1500" will also be excluded as a resource. A funeral trust doesn't seem like an option here since, quoting " Most pre-paid insurance policies range from $10,000 to $25,000. When buying one, you can pay the entire amount up front, or you can arrange to make payments with a three, five, or 10-ten year plan. In addition to the cost of the funeral, you should expect to pay some other fees. For instance, you may pay administration setup fees of $100 to $200. And some plans charge $50 to $150 ongoing and yearly maintenance fees" Citing Lincoln Heritage Funeral advantage. So it seems best to just put the permissible $1500 in a separate savings account to reduce the $1800 she has in her savings. I will still have to find ways to reduce rest. But, my concern was that once I do that, how will I get it out. Medicaid will also not exclude accounts that have beneficiaries. So its a logistical question. Will they exclude this particular type of POA account that is titled "burial fund" etc even if there is a beneficiary on the account? All POA accounts are usually not excluded.
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See your from NJ, as am I.

Not sure if you can put money towards a funeral in a bank account. What I had to do was cash in Moms insurance policies that had cash in value and put it into a funeral trust for Mom thru our Funeral Home director. Unlike Geaton's State, I was allowed to put the 10.4k into the trust. If the funeral had cost less than the 10.4k, the balance would have reverted back to Medicaid. But it was over 11k. Not sure who was set up as beneficiary, Moms paperwork is filed away. The trust paid the Funeral Home directly but I may have signed off for that to happen.

Here in NJ, if the person has no money towards a funeral, Medicaid will give 1500 for a funeral. Is that where you get the 1500 from? The spend down is 2000k. Mom is allowed that amount in her bank account. Anything extra needs to be spent. As Moms medicaid caseworker said "get creative". Check with a Funeral Director and see if he can set up a trust with the overage. I would also wonder if you can add to it. I need to see if I can do this with a nephew who is disabled.
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worriedinCali May 7, 2020
Medicaid in NJ Actually pays $2700 and the family can supplement a maximum of $1570. That’s probably the $1500 OP is talking about. NJ allows Up $15,000 In an irrevocable funeral trust.
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Prepay directly to the funeral home is accepted by Medicaid. It has to be in a prepaid irrevocable funeral contract.
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Geaton777 May 7, 2020
Is this still the case if the person is already a Medicaid recipient? I had called our local funeral home and asked to do a pre-purchase and he referred me to an insurance guy, who never called me back. She can only afford cremation, so should I contact a cremation organization directly? Medicaid will allow $1500 for this and my MIL received her $1200 tax relief money, but I can't get any clear direction from anyone here in MN. Thanks!
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Good question ElvaFe!
These are things I am still trying to figure out.

An answer will show up for you.
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ElvaFe, I am only posting here because I am also interested in any answers to this same question.
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