January 22, 2018 Brigitte Ganger

Does Medicaid Help With Funeral Expenses?

Resources for assistance when you can't afford a funeral

Does Medicaid Help With Funeral Expenses?
What programs exist to help with funeral costs? (Shutterstock)

What is Medicaid?

Medicaid is a government-created medical insurance program in the United States. 

This program ensures basic health insurance for the low-income residents, who may not have been covered under private plans due to pre-existing conditions.

Though established by the federal government as a response to crisis in which citizens could not access affordable medical care, it is administered at the state level. Different programs are funded depending on which state you live in. 

Who does it help?

As a public-assistance program, Medicaid covers low-income Americans for health-related expenses. 

What is Medicare?

Though the Medicaid program varies by state, Medicare is federally funded and covers some expenses of the following groups of people:

  • Elderly

  • Pregnant

  • Disabled

Does Medicaid or Medicare offer any benefits for funeral expenses?

Presently, these programs don't directly cover the costs of funeral expenses. 

However, Medicare offers Medicare Medical Savings Account Plans (MSA) which allow people to save for certain medical expenses, including funerals. The money you save is not considered part of your assets and so is unaffected when your eligibility for the long-term health care is checked. 

Pre-paid future plan

Pre-paid future plan, burial funds, and burial space items are all things you can save for under medical account savings plans, along with other health expenses. 

For people considering spending down their assets in order to qualify for long-term medical care, you can purchase a future funeral plan, according to My Tribute Planner. This can benefit those who don't qualify for the Medicaid program, or those whose assets are greater than the exempted amount. 

If you make more than the Medicaid-mandated income limit, you can spend down in order to qualify. Spending down is when prospective Medicaid recipients use excess income on medical bills. That income is not counted when determining eligibility for Medicaid. 

If this is you, you can spend down your assets into a funeral expense account, and save money. This is an irrevocable contract, which means that if the value of the account happens to be a handsome one, the contract cannot be canceled. The contract in its terms is counted off the asset chart.

Burial funds

These funds can include everything that is required for a funeral service. The requirements can be either of the Medicaid applicant or his or her spouse. Burial funds can be used to buy flowers, honorariums, police escort, obituaries and everything that is needed. 

If these funds are in a revocable account, then they can be withdrawn for the value of it if the funds are less than $1500. An irrevocable account can let the bearer set aside larger amounts. 

Burial space items

'Burial space items' refers to vaults, urns, caskets and anything that can be a part of burial space.

Medicaid allows the purchase of burial space items as part of this account, for the applicant as well as for the spouse and also any other immediate family member. These items are required to be placed in the irrevocable account. 

Other resources to help lower funeral expenses

If the Medicare Medical Savings Account Plan is not accessible to you, there are other options for receiving some money toward a funeral. 

1. Social Security death benefit 

Social Security offers a one-time payment of $255 for funeral costs, for those who had previously qualified for benefits. The lump sum will be paid to a spouse or child who had been eligible for Social Security benefits during the same month in which the death occurred. 

2. DFS Memorials

DFS Memorials is a destination for low-cost cremation. However, for those who prefer burial DFS can connect customers with several other local low-cost funeral providers, starting from as low as $596. 

3. Funeral insurance policy

You can take out a funeral insurance policy to cover funeral expenses. Through this type of policy, the funeral home itself is your beneficiary. Insurance policies like this can ensure the funeral is pre-planned and in accordance with the wishes of the deceased person. However, it takes some advance planning. 

The benefit is paid to the funeral home who will be handling your ceremony at the time of your death.

Check out our Tips for Choosing Funeral Insurance Plans.

4. Totten Trust

If you would prefer for the insurance money to go to a beneficiary, rather than directly to the funeral home, consider using a Totten Trust instead.

A Totten Trust is payable on death. It is a type of bank account, with the account holder acting as its trustee.

The beneficiary can be any person. And on the day of your death, the money can be available to the person named a beneficiary in order to carry out funeral expenses. 

Is GoFundMe a good option?

GoFundMe is a fundraising website. Folks can raise money for anything, including surgery expenses, tuition and community centers. One of the most common ways families use GoFundMe, however, is to cover funeral expenses—especially where the death was sudden or unexpected. 

According to GoFundMe, fundraising can be beneficial when:

  • The long-term illness of the deceased person has caused depletion of the savings

  • The funeral expenses exceed any savings account

  • The funeral expenses exceed any funeral plan

Whether it can be a good option for you or your loved ones depends upon your values, and needs. However, funeral fundraising with it can be very easy.

The takeaway

Though there are many options for subsidizing funeral-related expenses, there's no replacement for good financial planning. Neither a Medicare Medical Savings Account Plan nor Social Security will fully cover the cost of a death. If you haven't started planning for end-of-life arrangements, an experienced funeral director will be able to get you started. 

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