March 2004

How Medicaid and SSI Recipients May Prefund their Funerals

It is important to know that consumers who are eligible for Medicaid or Supplemental Security Income (SSI) are entitled to prefund their funeral expenses by setting up what is known as an "irrevocable trust." These irrevocable trusts allow Medicaid and SSI recipients to set aside and designate funds for the sole purpose of paying their funeral and burial expenses without having to totally exhaust (spend down) their savings. Money deposited into irrevocable preneed trusts will not be counted as part of the recipient's financial resources.

New York State law requires that trust accounts established for Medicaid/SSI recipients who wish to prefund their funerals must be "irrevocable" to make sure that the funds will be available when needed, and used only for funeral expenses. These funds are used to prepay only reasonable and common funeral expenses for such things as professional services, transportation, facilities and merchandise, as well as cash advances to cover the cemetery and other related charges.

Consumers who are applicants or recipients of SSI/Medicaid, and who are in the spend down process, should meet with their family funeral director as soon as possible. During the prearrangement conference, the consumer or his/her legal representative, will select the funeral service and merchandise he or she desires from the funeral home's "General Price List." The funeral director will then note these selections on an itemized statement which shows the current retail value of the merchandise and services selected. The next step is prepaying the arrangements and making certain that they will qualify as a prepaid funeral resource exclusion by placing the funds in an irrevocable prepaid funeral trust account.

Because the paperwork supporting this process must meet strict federal and state requirements, Social Service caseworkers and other personnel will require evidence that the funeral arrangements exist, and that they are linked to an irrevocable funeral trust account as directed by New York State law.

If you have any questions about prefunding a funeral and if you or a family member are Medicaid or SSI eligible, check with your family funeral director. He or she has set up many irrevocable trust accounts for consumers who were in the spend down process, and is fully qualified to provide you with information and guidance. You may also visit the New York State Funeral Directors Associations Website at "www.nysfda.org" to obtain more information about establishing irrevocable trusts. Click on "Preplanning a Funeral" for on-line information, or click on "Bookstore" to order the brochure "Preplanning Prefunding a Funeral" which includes a sample Pre Need Arrangement form for Irrevocable Medicaid trusts.

We at NYSFDA believe that all consumers regardless of income or financial status should have a dignified funeral service and burial. We are proud to say that our Association and our more than 3500 licensed funeral director members helped to create the law that allows Medicaid and SSI recipients to plan ahead for their final ceremony.