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By John M. Bigler To the average lay person, the Medicaid Program remains a mystery filled with mazes and traps for the unwary. As we have documented over the last several years, there are numerous misconceptions about the program. However, one of the things that has always been fairly simple to understand is the burial fund.
The burial fund was used in Medicaid planning to protect an additional $1,500.00. This amount has to be kept in a separate account and labeled burial fund. It could also be the cash value of a life insurance policy as long as it did not exceed $1,500.00. Many applicants thought that once the burial fund was set up that it couldn't be touched until death, but that is not the case. The applicant can access that money for any reason during their lifetime. Of course, $1,500.00 has become more and more of an unreasonable number considering the increasing costs of burials. In elder law circles, the fund has been jokingly referred to as the "shallow grave" fund. In the past, it has always been possible to prepay certain burial expenses and still retain the $1,500.00 burial fund. Things such as headstone, plot and casket could always be purchased with the assets of the applicant and would not be challenged by Medicaid. Now, however, as of January 1, 1997 a new law has gone into effect allowing a Medicaid or SSI applicant to fully prepay his/her burial expenses, as long as payment is made under an "irrevocable burial trust". While the new law still permits an individual to have a burial fund, there is no practical advantage to having one as part as the Medicaid spend down, since the full funeral costs can be prepaid under the irrevocable funeral home agreement. Note: This author has discussed this matter with various funeral directors, all of whom who are familiar with the new law. Obviously, it's advisable to make arrangements with a funeral parlor that has forms for an irrevocable burial trust. In the past, prepayment of burial expenses was a revocable agreement made with the funeral home. The funeral home was required to hold the payment in trust for the customer. The customer would be entitled to return of funds plus any accrued interest. Now, general business law carves out a blanket exception for the prepayment. As long as these payments are made pursuant to an "irrevocable burial trust" agreement, the funds will be excluded in the eligibility determination. The local county Department of Social Services (DSS) will need a copy of the irrevocable agreement. However, there is no longer any distinction between exempt burial expense items and non-exempt other funeral expenses. Those people that have made arrangements prior to January 1, 1997 that were allowable under then existing Medicaid rules need not worry as those accounts still are valid. Under the new agreement, when the payment is made into the irrevocable funeral agreement, the funds can no longer be returned to the customer or that person's heirs. Instead, any unapplied amounts are returned to the DSS and those amounts will be used to help cover the burial costs of the indigent. One of the purposes for this trust from the state's point of view was to eliminate fraud. (A client might go to a funeral parlor and prepay an excessive amount of money and then after death, have that money be returned from the funeral parlor to heirs.) The burial fund can be set up at any time. Even somebody who is already receiving Medicaid but then suddenly finds themselves receiving an unexpected amount of money either from an inheritance or a lawsuit settlement and has not prepaid burial expenses can do so with the money received. For years, the elder law community has been complaining about the unreasonable amount allocated for a burial fund. Finally, under this new law, those individuals whose assets are threatened with dissipation as the result of catastrophic illness should at least have the peace of mind that they will be able to arrange for a proper burial before spending down all of their assets. Reprinted with permission of the Suffolk Times © 1999 [ Contact Us ] [ Guestbook ] [ Email ]  The Law Offices of John M. Bigler, Attorney At Law 1421 Wantagh Avenue, Wantagh, New York 11793-2206 1-888-ELDER-LAW · 516-409-6565 · Fax: 516-409-6522 E-Mail: info@biglerlaw.com · Web Site: www.biglerlaw.com |
An applicant for Medicaid eligibility resources, is allowed a resource account (currently $3,450.00) and a burial fund of $1,500.00. The amount of the burial fund has not changed for many years.