Prepaid Funeral Plans

Prepaid Funeral Plans: What Expenses Can Be Included and What Expenses Should Be Excluded

Today we’re talking about prepaid funeral plans for Medicaid recipients. Many of our previous blogs have addressed Medicaid qualifications and rules for those needing assistance paying for a nursing home or skilled nursing facility. In many of these cases, assets are transferred from the nursing home patient to a family member or loved one to help the nursing home patient qualify for Medicaid. This helps to preserve a person’s estate and assets so they’re not used to pay for nursing home care.

But what about funeral costs? If a person has little or no assets in their name, how will funeral costs be handled? Prepaid funeral plans are a great way to plan ahead for end of life expenses, but there are some unwritten rules related to how the funds in these plans should be used. We recently received a letter through our [email protected] service regarding this specific issue:

Dear Nursing Home Guy,

My father is in a nursing home and wants to be buried next to my mother in New Jersey, which adds considerably to the funeral expenses. I understand that my father can spend down some of his assets on a prepaid funeral plan. My sister and brother are asking if I can include their hotel costs and airfare in the prepaid funeral expenses. Can I do that?


Concerned Traveler

Prepaid funeral plans are limited to a dollar of $10,000. That prepaid plan could be in the form of an insurance policy, a bank account, or some kind of prepaid obligation with a funeral home. In the case of the latter, there’s usually a contract between you and the funeral home that says you paid them $10,000 up front. In the case of the life insurance policy, the policy would pay a maximum of $10,000 towards the funeral expenses when someone passes.

Best Practices for Prepaid Funeral Plans

As a general rule, prepaid funeral expenses should not include any travel or meals. There’s really no statute on it or any rules against it, but it’s a safe play to not include those types of expenses. There was a prior court decision regarding a supplemental needs individual who had passed, and the family was asking if funeral expenses could be paid. The court ruled that those funeral expenses could not be paid on behalf of the supplemental needs individual.

The situation would be similar with your dad. If he passes, I do not recommend that you try to cover air travel, hotels, meals, or anything like that with the prepaid funeral expenses. When we’re considering what can be covered under a prepaid funeral plan, we’re thinking of the casket, headstone, flowers, program, chapel rental, etc. — everything but flights, fuel, hotels, or meals. So the prepaid funeral plan should only pay for those explicit, necessary funeral expenses.

I wouldn’t even attempt to include any of those expenses in the prepaid funeral plan. I know from experience that the Medicaid or DFACS workers here in Georgia are very attune to that. They’re going to look closely at the contract that you provide showing exactly what is included. As a result, it’s not a good idea to include those items. There’s really no authority for including the personal expenses, but I wouldn’t do that for fear of violating or being accused of violating the Medicaid rules.

Contact Us So We Can Help You

If you have loved ones who are in a nursing home and receiving Medicaid benefits, we’ll be glad to talk to you. We’ll answer any questions you have about prepaid funeral plans or any other related questions you may have. Please send us an email to [email protected], complete this form, or feel free to call us at 229-226-8183.

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