Everything Elder Law (click for full article)
A prepaid funeral contract is a legal agreement that allows a person to pay now for funeral services that will be needed sometime
in the future. This contract may include the funeral, burial,
cremation, and other related services. A prepaid funeral contract may be
revocable or irrevocable. Irrevocable means the contract cannot be
canceled. Only an irrevocable funeral contract is an exempt asset for
Medicaid purposes.
Medicaid
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 allows you to put
money aside, in a separate account, to pay for your funeral and burial
expenses. Qualified funding vehicles, such as funeral insurance policies
and trust accounts are allowed, provided they are irrevocable and
non-refundable, and cannot ever be used for purposes other than funeral
expenses. 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.
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