Using a Prepaid Funeral Contract to Spend Down Assets for Medicaid
No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your death, a prepaid funeral contract can be a good way to spend down assets in order to qualify for Medicaid.
Posted on August 3, 2017
A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.
One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price—possibly saving your family money. You are also saving your family from having to make arrangements after you die, which can be difficult and time-consuming. And, if you are planning on applying for Medicaid, a prepaid funeral contract can be a way to spend down your assets.
Medicaid applicants must spend down their available assets until they reach the qualifying level (usually around $2,000, depending on the state). By purchasing a prepaid funeral contract, you can turn available assets into an exempt asset that won't affect your eligibility. In order for a prepaid funeral contract to be exempt from Medicaid asset rules, the contract must be irrevocable. That means you can't change it or cancel it once it is signed.
Before purchasing a contract, you should shop around and compare prices to make sure it is the right contract for you. Buyers need to be careful that they are buying from a reputable company and need to ask for a price list to make sure they are not overpaying.
For information from the Federal Trade Commission on shopping for funeral services, click here.
More from our blog…
What You Should Know About Long-Term Care
Research shows that roughly one in seven adults aged 65 or older will need long-term care at some point in their later years. Meanwhile, tens of millions [...]
Understanding Medicaid: What Does Medicaid Cover?
In the complex and frequently changing landscape of health care in the United States, Medicaid stands out as a vital program. Since 1965, it has [...]
Elder Financial Abuse: How an Elder Law Attorney Can Help
Elder financial abuse is a significant issue affecting many older adults nationwide. It involves someone exploiting or misusing an older person’s finances or assets for [...]
Does Medicare Cover Prescription Weight Loss Drugs?
Americans have a growing appetite for prescription drugs such as Ozempic, Wegovy, and Mounjaro. Originally developed to treat Type 2 diabetes, they are now exploding [...]
Recent blog posts
FREE WEBINAR
5 Things to Know About
Estate Planning
When You Turn Sixty-Five