Medicaid is a government-funded health insurance program created to assist Americans with lower incomes that have a vital need for medical care. In general, seniors over age 65, low-income adults, pregnant women, and disabled individuals are eligible for Medicaid, depending on their assets and income. Limits were established so that certain assets must be drained by health care costs before eligibility kicks in and medical costs are paid.
One way to circumvent the restrictions is to spend down assets in certain ways so they're excluded (and protected) from the total asset calculation that determines qualification for Medicaid. With some assets, the spend down needs to take place at least five years before applying for Medicaid. Planning ahead is of the utmost importance.
A prepaid funeral contract that is revocable (can be cancelled) is included in assets when being considered for Medicaid, which makes it more difficult to qualify for benefits. Irrevocable burial contracts are not considered in the total asset calculation, which means the individual applying for Medicaid can pay these costs in advance and not have the value impact their eligibility for Medicaid.
"A prepaid funeral contract allows people to pay now for services in the future," explained John Callahan, owner of U.C. Davis-Callahan Funeral Home. "Depending on a person's final wishes, the contract can cover expenses for the burial, the clergy, the funeral home, and the death certificate. It doesn't cover burial plots, headstones, or caskets, as those are taken care of separately." Prepaid funeral plans also remove the financial burden on your family after you die, and they won't have to make the important decisions regarding your memorial service and your final disposition. Life insurance policies can also be assigned to cover funeral expenses.
If you have any questions about how prepaying for your funeral expenses helps you spend down your assets to help you qualify for Medicaid benefits, please contact:
U.C. Davis - Callahan Funeral Home, LTD.
301 W Washington St.
Morris, IL 60450