| MEDICAID AND FUNERAL COSTS
READER QUESTION:
I wanted to inquire…can you prepay for funeral costs after you have become eligible for Medicaid? My parents are eligible for Medicaid, but their IRA’s RMD that will be paid out in December may slightly put them above the resource limit. Therefore, would creating an irrevocable funeral trust help with the spend down of the excess asset?
Do you need to choose a specific funeral home, or just create an irrevocable funeral trust? Do we need to go with a law firm to do this?
MY RESPONSE:
Yes, No, No
Yes, you can generally prepay funeral expenses even after you are already receiving Medicaid. In fact, an irrevocable prepaid funeral can be a very good way to spend down excess assets. So, if an RMD leaves your parents slightly over the Medicaid resource limit, using some of that money to prepay their funerals may solve the problem.
No, you do not need to find a particular funeral home. They all understand this. They will all know what to do.
No, you do not need to hire a law firm to create a separate trust. Just go to the funeral home and tell them to set up an irrevocable prepaid plan that will be safe for Medicaid. The funeral home will help you select the arrangements and properly handle the funds. They call it a trust, but it is nothing fancy. You give them money for the funeral, and it MUST be used for the funeral. You can’t get the money back, and if you do not spend it on the funeral, then Medicaid gets reimbursed from the balance not used.
The important word is irrevocable. If the money can simply be taken back, Medicaid may still consider it available to your parents.
One final point: if someone receiving Medicaid suddenly has too much money, don’t simply give the excess money away. There are often perfectly permissible ways to spend it down without jeopardizing Medicaid eligibility.
Prepaying funeral expenses is one of them.
I hope this helps. |
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