Ask the Expert: Does Medicaid Cover Prepaid Funerals?

Q. I am considering whether to prepay for my funeral to save my family the expense and burden during what will be a tough time, but had a few concerns about it first. I am interested in learning more about prepaid funeral contracts and whether Medicaid pays for funerals, at all. If not, is it possible to set aside money for this in a funeral trust and be exempt?

Based on question that was asked on Avvo by a resident of Clarksville, VA

  1. A.    Medicaid itself does not pay for funerals, but it does have rules that allow you to set aside money for your own funeral, burial, or cremation without having that money “count” as part of your assets when Medicaid determines your eligibility for long-term care coverage. Medicaid Regulations permit the ownership of prepaid funeral arrangements if funded totally by an irrevocably-assigned life insurance policy and/or by an irrevocable trust that is properly established by a funeral home.  The amount of money you spend on properly-established prepaid funeral arrangements will be an exempt asset in connection with Medicaid.  Medicaid regulations permit the Medicaid applicant to purchase prepaid funeral plans not only for the Medicaid applicant but also for his spouse (and his or her children, if desired), but again it is critical that these pre-paid arrangements are set up properly using either an irrevocable life insurance policy, a special type of irrevocable trust, or both.


Q:  My second question is whether Medicaid imposes a limit on how much you can spend for prepaid funeral arrangements.

  1.  No. There is no limit on the amount of money that can be spent on properly-established Medicaid-exempt prepaid funeral arrangements, but in reality, prepaid burial arrangements typically cost between $8,000 and $12,000 per person.  Prepaid cremation arrangements typically cost between $3,000 and $5,000 per person. When the proper funding vehicles are used to prepay a funeral, the value of the prearranged funeral contract and the funding vehicle are excluded as a countable resource in determining SSI & Medicaid eligibility.


Most funeral homes will tell you that they have an appropriate funding system in place, but in actuality many funeral homes do not use appropriate funding system, which you only find out when you apply for Medicaid and are denied.  The Fairfax Medicaid Law Firm of Evan H. Farr, P.C. has certain funeral homes that we work with that do use an appropriate funding system, and we therefore refer our clients to these funeral homes.  However, even if you use a funeral home that uses an appropriate funding system, the funeral director must still fill out the forms properly, and there is significant opportunity for error in completing the forms. Accordingly, for our clients, we ensure that our office reviews the completed forms before our client signs them.

Prepaying for a funeral has many benefits, including locking in prices, relieving the burden of family members during a time of emotional stress, and ensuring that your personal desires are carried out according to your wishes. Additionally, purchasing prepaid funeral arrangements is just one of dozens of different Medicaid Asset Protection strategies that someone applying for Medicaid can use to legally and ethically protect assets from having to be spent down in connection with nursing home care. With proper planning, families can protect most or all of their assets and obtain Medicaid assistance without having to deplete their life savings. Always contact an experienced Elder Law Attorney, such as Certified Elder Law Attorney Evan H. Farr, before you make any prepaid funeral arrangements or take any other steps towards filing for Medicaid. Medicaid is the most complex area of law in existence, and one mistake can have tragic consequences for you or your loved one. Our firm serves clients throughout Virginia, Maryland, and DC, and would be happy to assist you.

Click here to view a short video and read more about Medicaid Asset Protection. Call 703-691-1888 to make an appointment for a consultation with Evan H. Farr, CELA to talk more about your specific situation.

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About Evan H Farr, CELA, CAP

Evan H. Farr is a 4-time Best-Selling author in the field of Elder Law and Estate Planning. In addition to being one of approximately 500 Certified Elder Law Attorneys in the Country, Evan is one of approximately 100 members of the Council of Advanced Practitioners of the National Academy of Elder Law Attorneys and is a Charter Member of the Academy of Special Needs Planners.