Pre-Paid Funeral and Burial Contracts for Medicaid Recipients

Pre-Paid Funeral and Burial Contracts for Medicaid Recipients

You may have heard that you will have to “spend down” virtually all of your income and assets to qualify for Medicaid.  However, there are some exempt assets that Medicaid applicants can keep and still qualify for benefits.  One way that Medicaid applicants can keep some of their funds is to arrange for pre-paid funeral and burial expenses.  Most transfers of assets are not allowed within a five year “look back” period prior to applying for Medicaid.  One of the exceptions to that rule is to place a limited amount of funds into qualifying pre-paid funeral contracts.  The exception for these types of contracts can ultimately help loved ones of Medicaid beneficiaries to honor them after their passing in a respectful and dignified manner.  This type of pre-planning can often bring peace of mind to potential Medicaid beneficiaries and their families.

There are two main types of pre-paid funeral contracts that are allowable under current Medicaid regulations in Connecticut.  The first is an Irrevocable Funeral Trust.  These can be pre-funded up to $5,400 for funeral and/or burial expenses.  Basic service charges, funeral services, preparation of remains, and vehicles can be included.  An Irrevocable Trust for these expenses cannot be revoked or cashed in, but may be transferred to another licensed funeral home.

The other type of allowable pre-paid contract is a Revocable Burial Plot Allowance or Contract.  This type of contract can be pre-funded in any amount for specific burial and cemetery items and services.  The items that can be included are:

  • Casket or urn
  • Outer burial container or vault
  • Cemetery expenses (e.g. gravesite, opening and closing charges)
  • Cemetery monument, marker, or mausoleum and engraving

This type of burial plot allowance contract can be revoked.  If it is revoked any funds set aside in the contract must be returned to the State if the contract is cancelled.  If these funds are not returned, the beneficiary may lose his or her eligibility for Medicaid benefits.

Medicaid allows beneficiaries to own one or more personal life insurance policies with a combined death benefit of up to $1,500.  If the death benefit for the life insurance policies is more than $1,500 then the cash surrender value of the policies will be counted as an asset when applying for Medicaid. 

Irrevocable trusts for funeral expenses and revocable burial plot allowances can be prepared for almost any licensed funeral home you choose.  It is important to consult an attorney who understands Medicaid requirements to ensure that any contracts you make comply with the State’s Medicaid regulations. 

If you have questions about pre-funded funeral contracts and Medicaid, or if you want to learn more about Medicaid in general, please call our office at 888-822-8778 to schedule a consultation.

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