Burial Contracts and Medicaid Eligibility
Last week, we discussed the complexities of how life insurance impacts Nursing Home Medicaid eligibility. However, what if the Medicaid applicant does not have life insurance but would like a plan in place to help their family pay for final expenses? Many people will consider paying in advance for funeral and burial expenses so they may reduce this financial burden on their loved ones. There is good news! Let’s dig into the details to learn how burial contracts are considered when obtaining Medicaid eligibility.
How do burial contracts work?
A prepaid burial contract is an agreement where a buyer pays in advance for services the seller agrees to provide upon death. Burial contracts are typically issued by funeral homes or cemeteries. They may cover services of the funeral director and staff or specific items related to burial such as the memorial, casket, flowers, or death certificates. All burial contracts in the state of Georgia are revocable by state law, which means they can be changed.
The value of burial contracts may be considered.
Medicaid policy allows an applicant to exclude $10,000 for burial expenses. Prepaid burial contracts, which are paid in full, may be applied to this exclusion. Medicaid caseworkers review burial contracts to determine if they have been fully funded and itemized. The contract value is then calculated according to the burial exclusion policy.
All items on a burial contract are not treated equally.
Now things get a little trickier and confusing. Generally, the cost of each item is applied towards the $10,000 burial exclusion allowance. However, there are some items that appear on a burial contract which may be exempt from both the Medicaid resource and burial exclusion policy. These items are called burial space items. Examples of burial space items include the burial plot, grave site, crypt, mausoleum, casket, vault, or headstone. Keep in mind this is not the entire list! There are many other common items which appear in prepaid burial contracts that are also considered burial space items.
In addition, burial plots owned by a Medicaid applicant designated for immediate family members may also be considered exempt. The nuances within in the burial exclusion policy create the possibility that some burial contracts may meet Medicaid requirements even if the sales price exceeds $10,000! It is wise to consult with an elder law attorney, with an expertise in Medicaid policy, before cancelling or amending a burial contract.
Careful review of all burial resources is critical when considering Medicaid eligibility.
As mentioned, Medicaid burial rules are very complex. It is important to note the Medicaid burial exclusion allowance is calculated utilizing the value of all the prepaid burial contracts, life insurance or burial funds that an applicant and/or spouse own. A married couple is permitted to exclude $10,000 for each spouse. The attorneys at Hurley Elder Care Law are skilled at reviewing the combination of these items and finding the most advantageous way to allocate these resources when applying the burial exclusion policy. Obtaining a thorough review of all burial resources from an expert in Medicaid policy can help you save money and headaches down the road.
It may not be too late to prevent costly mistakes.
If you are considering purchasing a burial contract, setting up a burial fund or surrendering a life insurance policy to obtain Medicaid eligibility, please call us at 404-843-0121. We are happy to discuss your situation in more detail to determine how we can best preserve and protect your resources.
Subscribe to our blog and monthly newsletter.