Our Experienced Elder Law Attorney Explains How Prepaid Funeral Expenses Can Help With Medicaid Spend-Down
When people need long-term care in a skilled nursing home or assisted living facility for themselves or a loved one, they are often shocked at the cost. Many people can’t afford it and turn to Medicaid to help foot the bill. But Medicaid has strict financial requirements for eligibility that require many people to “spend down” their assets before they can qualify. One way to spend down your assets is to prepay your funeral and burial expenses. The dedicated and compassionate elder law attorneys at Alatsas Law Firm can discuss your situation and help you determine if a spend-down works for you and the best way to do it. 
Understanding Medicaid and How to Meet Medicaid’s Financial Requirements for Eligibility
Medicaid is a state and federal joint program that provides health care coverage for some people with limited income and resources. Medicaid becomes particularly important for many seniors who often need more care. Medicaid can be used to cover some or all of their care expenses, such as the costs of a long-term skilled care facility, but you can’t qualify if your assets are above a certain limit.
To obtain Medicaid benefits for long-term care, many people have to “spend down” their assets until their income and assets are low enough to qualify. Medicaid can then be used to cover the gap between what they have and what a nursing home or assisted living facility costs.
New York Does Not Allow Irrevocable Trusts for Funeral Expenses to Spend Down for Medicaid Eligibility
Medicaid allows you to prepay your funeral expenses, which is one way you can spend down your assets to qualify for Medicaid benefits. These assets are considered “exempt,” so they won’t affect your eligibility. In most states, you can set up an irrevocable funeral trust (IFT) and transfer assets into that to help spend down to meet Medicaid’s strict financial requirements. Once your money and assets are placed in this irrevocable trust, Medicaid no longer considers them belonging to the applicant.
However, New York is one of two states in the U.S. that does not allow IFTs to spend down for Medicaid eligibility. But you do have other options:
Put Money in a Bank Account
You can create a bank account with money specifically designated to pay for funeral expenses. In New York, you’re allowed to allocate up to $1,500. So, if you believe you’ll need Medicaid benefits in the future, you can spend down your assets by creating this account, and Medicaid won’t consider the money part of your overall assets when determining eligibility.
Sign a Pre-Need Funeral Contract
You set up a pre-need contract directly with the funeral home you want to handle your services. This contract specifies the types of services you’re paying for, how the funeral home will deliver those services, and how much the services cost. A pre-need contract sets a guaranteed price for every piece of the funeral service; however, it is less flexible than an IFT because an IFT allows your family members to use any funeral home in the U.S. when the time comes for them to handle your services.
Your pre-need funeral contract will be Medicaid-compliant as long as it’s irrevocable. This means you can’t change, cancel, or revoke it after it’s been signed.
It’s important to plan carefully with a New York elder law attorney to ensure that you make the right decisions for your future funeral as well as for spending down your assets to meet Medicaid eligibility. The qualified elder law attorneys at Alatsas Law Firm can help.
Funeral Expenses That Are Medicaid-Compliant
It’s important to know the type of goods and services you can prepay with regard to your funeral. Here are some of the items that Medicaid approves of and your pre-payment covers:
- Service charges of the funeral home staff
- Casket or burial vault
- Burial plot
- Cremation
- Urn
- Death certificates
- Embalming
- Music for the service
- Printed death notices
- Headstones
- Makeup and hairstyling
- Clothing
- Funeral home use
- Clergy fee
- Cemetery fees
- Vehicles, such as a limousine and/or a hearse
If you spend money on flowers or travel for relatives to come to the funeral, these are not considered Medicaid-compliant in some IFTs. So, it’s important to make sure you discuss with your elder law Medicaid attorney whether you can include them in your pre-need funeral contract.
Work With an Elder Law Attorney to Spend-Down Your Assets for Medicaid Eligibility
When you consult with a skilled elder law attorney who understands the strict Medicaid rules, they can help you find ways to allocate existing assets to help with the spend-down process, including setting aside money for funeral and burial or cremation.