Medicaid and Prepaid Funerals: Family Members Can Now Be Included
By David R. Okrent, CPA, Esq.

When coming in for a first consultation on the matter, many of our clients think that they will never be eligible for Medicaid because of what the government considers “excessive assets.” However, one of the allowed exemptions regarding a Medicaid application is a prepaid funeral, and we are able to help many of our clients to create this plan for them, and now, for some of their loved ones.

Aside from the benefits that come when filing a Medicaid application, having a prearranged, and pre-paid funeral is highly recommended for other reasons. By planning the details, and paying for funeral and memorial services in advance, loved ones are saved some of the burden at a very difficult time.

What music should be played during the service, should there be flowers or not? Which cemetery or funeral parlor would the deceased have chosen, and which casket or urn? Having to answer these questions can be harrowing to think about, but doing these things in advance removes the strain and stress of having to make these decisions at a much more difficult time, often, with no guidance. By creating a prearranged plan, family members and loved ones have a step by step plan to follow ensuring that your wishes are carried out exactly as you, or your loved one, would have wanted.

When determining someone’s eligibility for Medicaid, we review all of their assets and income as well as many other items, such as property holdings, and other resources. A properly prearranged, and paid for funeral is an allowed exemption to to the general resource limit for a single person of $13,800 (as of the date of this article).

Prior to January 1, 1997, the Medicaid exemption for a prepaid burial fund was $1,500,00. Reflecting on this limitation, the state enacted a new law so that all Medicaid applicants could establish a single, irrevocable, pre-need funeral agreement in New York with a funeral firm, funeral director, undertaker, or any other person, firm or corporation. Generally, all pre-paid burial space items can be, and are covered under an irrevocable pre-need funeral agreement. However, certain burial space items, purchased and paid for in full prior to entering into an agreement, such as a cemetery plot, casket, urn, vault, mausoleum, crypt, or headstone, may remain outside the agreement.

New York has again reviewed the prearranged funeral guidelines and has, as of June 8, 2010, expanded this privilege even further. As of June 8, 2010 a Medicaid applicant can now not only prepay a funeral for themselves, but also for a “family member.” Clients are warned, however, that the new law does not currently define the exact meaning of family member and it may be some time before they do. We are now advising all of our clients to consider this additional exemption when preparing their retirement and long term planning needs.

*David R. Okrent, CPA, Esq. is the Managing Attorney of The Law Offices of David R. Okrent which has been handling Tax, Elder Law, Estate Planning and Administration, Special Needs for over 26 years and now also and Veterans benefits. Mr. Okrent was designated one of Long Island Alzheimer’s Foundation’s “Angels of Spirit” and is a recipient of the Long Island Coalition on Aging “Man of Spirit.” He is the NY State Bar Association’s Elder Law Section Co-Chief Editor of the Elder Law Attorney (it’s members quarterly publication), past Vice Chairman of its Estate tax & Planning Committee and the Tenth District (long Island) delegate. He is an advisory member to the Suffolk County Bar Association’s Academy of Law. He has served as the Co-Chair of the Suffolk County Bar Association’s Elder Law Committee, Legislation Committee and Chairman of its Tax Committee. He is a member of the National Academy of Elder Law Attorneys and a past long time Chairman of the Long Island Alzheimer’s Foundation’s Legal Advisory Board, as well as being a former IRS Agent and holding a CPA. For more information visit http://www.davidrokrentlaw.com or call (631)427-4600. He and his firm are available for consultation and are accepting new clients.