How Does a Burial Contract Affect Medicaid Eligibility?

Placing flowers on a grave concept for Talk with a Medicaid planning attorney when considering a burial contract.

Seniors often consider buying a burial contract to pay for final expenses, to save loved ones from being responsible for the costs. While Georgia Medicaid rules for long term care benefits have a burial exclusion in calculating assets for eligibility purposes, the rules are complex. If you are thinking about purchasing a burial contract — or you already have one — you should talk with a knowledgeable Medicaid planning attorney about how the contract could affect your eligibility for Medicaid nursing home benefits.

Medicaid Burial Exclusion

Georgia Medicaid rules allow certain burial-related items to be excluded from the asset calculation for Medicaid eligibility purposes, subject to specific criteria and restrictions. Under the exclusion, up to $10,000 of funds for burial expenses is excluded from the applicant’s countable resources for eligibility purposes.

Any countable resource may be designated for burial expenses. A paid-in-full burial space may be excluded, such as a single plot, casket, urn, or other container and any necessary and reasonable improvements, such as a headstone, marker, plaque, or vault. Burial spaces for immediate family also may be covered by the exclusion.

Burial assets that exceed the $10,000 exclusion count toward resources for the eligibility asset calculation. For a detailed explanation about Medicaid eligibility and countable assets, please refer to our separate article, What Assets Count for Medicaid Eligibility?

Burial Contract

A burial contract, also referred to as a prepaid burial contract or pre-need burial contract, is an agreement through which the purchaser pays in advance for burial expenses on the death of the purchaser or another named individual. In most cases, a burial contract is between a purchaser and a funeral home or cemetery.

A burial contract that is paid in full may be applied to the $10,000 burial expense exclusion. However, the rules are complex. Some items in a burial contract may be exempt from both the exclusion and countable assets. Medicaid reviews the contract to determine the status of individual items in a burial contract.

If countable items in a pre-need contract exceed the $10,000 exclusion, the excess value counts toward assets for Medicaid eligibility purposes.

Burial Exclusion and Life Insurance Policies

Medicaid rules allow purchase of a life insurance policy to fund a burial contract, if the burial insurance policy only allows the proceeds to be used for the insured’s burial expenses. Generally, if the life insurance policy is itemized, it is treated like a burial contract. If not itemized, the face value of the life insurance policy will apply to the $10,000 burial exclusion. Any amount over $10,000 will be a countable asset for eligibility purposes.

Burial Funds

A Medicaid recipient or their spouse may set aside any amount of money for burial expenses, but the funds that are set aside count toward the $10,000 exclusion. To qualify for the exclusion, the funds may not be commingled with non-burial related assets. Burial funds may be commingled with other burial-related assets.

The complex Medicaid rules apply to calculation of the burial expense exclusion for funds set aside by a Medicaid applicant. In addition, any resource designated for burial expenses, including assets in a burial fund, that remain after payment of burial expenses will be subject to Medicaid estate recovery. These are just some of the important reasons to get advice from a Medicaid planning attorney if you consider any type of funding for your final expenses.

Medicaid Planning for the Burial Exclusion and Life Insurance Policies

As the preceding discussion makes clear, the Medicaid burial exclusion has complicated rules that apply. Life insurance policies also are subject to very complex Medicaid rules. A life insurance policy may or may not affect eligibility for Medicaid long-term care benefits in Georgia, depending on the type of policy. In a previous article, How Does Life Insurance Affect Medicaid Eligibility in Georgia?, we provide details about the role of life insurance in determining Medicaid eligibility.

If you have or are considering providing for burial expenses or purchasing a life insurance policy, you should talk with a Medicaid planning attorney to ensure that you do not jeopardize Medicaid eligibility. In addition, the burial exclusion and life insurance policies are only two of many important issues relating to eligibility for Medicaid long-term care benefits. Your lawyer can help you with all the issues that arise in connection with qualifying for Medicaid benefits.

In many situations, an individual who thinks they do qualify for Medicaid long-term care benefits can achieve qualification by utilizing special tools that are available under Medicaid rules to help individuals achieve eligibility. The only way you can determine whether the rules provide solutions to help you is to discuss your circumstances with a Medicaid planning lawyer.

Talk With a Georgia Medicaid Planning Attorney

In our Cartersville elder law practice at Asset Protection & Elder Law of Georgia, we focus on protecting our clients’ assets, whatever their unique circumstances may be. Medicaid planning is an essential part of our services for many clients. If you have questions about the burial exclusion or a life insurance policy, or other questions about Medicaid eligibility in Georgia, we can answer your questions and help you make the right decisions.

We provide elder law services to clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County.

Call us at (770) 382-0984 or contact us through our online form.