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Funeral Expenses and Medicaid

Whenever I talk to a family whose loved one is close to spending down the required amount of assets to qualify for Medicaid, the topic of burial expenses comes up.  Most people are aware that Medicaid permits setting aside funds to cover the burial but many are a bit fuzzy on the details so this week we’ll go over the basics.

Medicaid permits an applicant to set aside up to $1500 for burial expenses for the applicant, the applicant’s spouse and immediate family members as long as the funds are specifically designated for burial and not commingled with other assets.  In that case the funds do not count towards the $2000 asset limit.  Immediate family members would include children of the applicant.

The funds can be held in a revocable contract, revocable trust, as cash, or in a financial account, however, they must be clearly designated for burial and not combined with any other assets that are not designated for burial.  

Ownership of a burial space or an agreement to purchase a burial space is also an exempt asset and does not count towards the $1500 limit.  This includes a plot, vault, mausoleum or urn.  There is not limit on the cost of the burial space.

Most of our clients, however, choose burial arrangements that exceed $1500 in total cost so the burial set aside is usually not the best option.  Instead, a prepaid funeral trust, also permitted under Medicaid rules, may be a more appealing choice.  This irrevocable arrangement is what I will cover next week.