Advance funeral planning for baby boomers: Medicaid considerations

For many seniors and their family members, making the decision to enter or extend residence in a longterm care facility is life-changing. There are many factors that come into consideration when making this very personal decision, and for many families, the affordability of quality long-term care is the greatest challenge.

For decades, Medicaid has been an important assistance for families requiring long-term care. To qualify for the Medicaid nursing facility assistance, you must meet specific eligibility requirements, including limitations on monthly income and assets. As part of the qualification process, a financial “snap shot” is taken of the applicant’s Medicaid estate. If the applicant’s assets are greater than allowed by Medicaid, the applicant will go through the spend-down process in which the applicant is required to reduce, or spend down, their net assets before they are eligible.

Additionally, certain assets are considered exempt and therefore are not subject to the spend down process. In addition to assets like a home and personal effects, cemetery property and a prearranged funeral are two examples of assets that are exempt for Medicaid qualification purposes.

In most states, you can prearrange your funeral in any amount, fund it with an insurance policy which is made irrevocable, and it will be considered an exempt asset. Certain states have limitations on the amount. If your prearrangement is funded by trust, there are limitations on the maximum amount that can be prearranged. This often becomes an issue for families as they prepare to meet Medicaid eligibility requirements. To make sure that you are taking the right steps to protect your assets, contact your attorney, financial planning professional or local Medicaid office for assistance with your Medicaid planning.