Pre-Planning A Funeral: Part Of Your Medicaid Spend-Down Plan

28 September 2016
 Categories: , Blog


When you become old enough to apply for Medicaid but have too many assets, you may decide to do a "spend-down." This is the process by which you spend enough of your assets to qualify for Medicaid. The rules for spend-downs may vary from state to state, but you'll typically need to spend your assets on necessities, such as medical care. Pre-planning a funeral can be part of the spend-down process. Here are some things you should know about pre-planning a funeral and spend-downs.

Pay In Full

The key point to a spend-down is getting rid of your assets so you can qualify for Medicaid. Purchasing on credit may show intent to spend money, but it won't deplete your bank accounts. Work with your funeral director to purchase everything needed for your funeral, from the casket to flower arrangements.

Assign Your Life Insurance Policy

If you have a life insurance policy you intend to be used toward your burial expenses, consider assigning the life insurance policy to your funeral home. This makes the funeral home the beneficiary of the policy, letting you essentially pay for your funeral in advance with the promise of the policy paying out to the funeral home. If there is any money left over after the payment of your funeral arrangements, the money can be given to the next beneficiary on your policy.

Set Up An Irrevocable Trust

Irrevocable trust funds can be used to secure some of your assets while still letting you qualify for Medicaid. There are several types of irrevocable trusts, but the essential principle is the same. The trusts can't be reversed, which means the trust can't be changed later on. You can set up a trust for the care of a disabled person under the age of 65 or for the care of a surviving spouse. In some states, like New Jersey, you can also set up an irrevocable trust to cover the cost of your funeral expenses. Once the trust is set up, the money put into the account can't be counted among your assets.

If you aren't sure about how to set up your funeral arrangements as part of your Medicaid spend-down, consider hiring a lawyer and talking to your funeral home director to help you make the right decisions for your funeral and your finances. Once you complete your Medicaid spend-down, you can consider your options for nursing homes and assisted living facilities with fewer worries about finances.  

For more information, contact Bolton & Lunsford Funeral Homes or a similar organization.