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How Prefunding a Funeral Can Help You Qualify for Medicaid


A family member or friend is seeking to qualify for Medicaid and must spend down their assets to meet the threshold for eligibility, but you know that this person will need to have some money set aside for a funeral when they die.

This dilemma may seem like a catch-22: there need to be assets to pay for a funeral, but there cannot be assets to qualify for Medicaid.

Fortunately, there are stipulations in the rules governing Medicaid eligibility that allow an individual to set aside money in a qualified irrevocable prepaid funeral account without those funds being counted as assets when determining whether the person is qualified for the program.

If your family member or friend expects to receive SSI/Medicaid or General Assistance within the next six months, they are permitted to establish an account, without those funds jeopardizing eligibility. This allows individuals to plan and pay for a funeral before assets are spent down to Medicaid eligibility levels.

When making prepaid funeral arrangements, an individual has the right to plan the funeral of their choice. Certain items, however, cannot be paid for in advance when making irrevocable prepaid arrangements, and, if included, could jeopardize SSI/Medicaid eligibility status. For a list of those items, click here.

One way to prefund a funeral under Medicaid guidelines is to set up an irrevocable prepaid funeral account through Funeral Planning CHOICES, the leading funeral prefunding product in New Jersey and one of the largest prepaid funeral trusts in the country.

Funeral Planning CHOICES provides a safe, well-managed trust earning competitive interest rates. With Funeral Planning CHOICES, funds are pooled with thousands of other accounts in secure, jumbo certificates of deposit to earn the highest possible rate of return. Interest earned over time can help offset any future price increases in funeral home prices. In addition, all trust deposits are placed into an account insured by the Federal Deposit Insurance Corporation, ensuring the safety of the funds.

For more information about Funeral Planning CHOICES, click here.

Another way to begin the process of preplanning a funeral is through Funeral Matters, an online funeral arrangement tool. The tool allows consumers to review funeral offerings along with their associated prices and select services that are important to them within the comfort of their own home.

When finished, the tool will pose the question “Is the person you are making the arrangements for applying for SSI/Medicaid in the next 6 months?” Selecting “yes” as the answer will supply the consumer with options for prearranging a funeral permitted under SSI/Medicaid guidelines.

The consumer can then choose to save the arrangements, forward them to friends or family members or send them to a funeral home of their choice to begin a conversation with a funeral director about how to proceed.

Individuals who are preplanning and prepaying for a funeral should also know that they are not locked into the arrangements they make when they preplan. Once the intended funeral recipient dies, arrangements can be modified, but they still must remain within the guidelines for allowable items set by Medicaid.

Families, though, should seek to follow the original arrangements whenever possible since the prearrangements were made for a person receiving public assistance. That means that changes should not be made merely to use unspent funds.