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Michigan Elder Law Today

Thursday, July 16, 2015

Funeral Planning for Medicaid Eligibility

Are there any other less common ways to protect assets during the Medicaid planning process?

When it comes to planning for long-term care, many couples and individuals opt to pre-plan to eventually qualify for Medicaid coverage. While the thought of applying for need-based Medicaid coverage may seem unlikely for many middle-class individuals, the rising costs of long-term care – particularly for couples needing care together – is enough to deplete a sizable nest egg in just a few short years. 

The keystone of Medicaid planning is reducing one’s assets to the allowable threshold in order to reach the financial-need eligibility criteria. However, planners must be careful when transferring assets as Medicaid will impose a penalty period to address any transfers made during the five years immediately prior to the application for benefits. Fortunately, there are several other financial options to accomplish the “spend down” of assets other than outright transfers, sales or gifts, such as pre-planning for a memorial service, funeral, and/or burial plot. 

Earmarking assets for funeral costs

Pre-planning one’s funeral is hardly the most pleasant way to spend an afternoon. However, this important – and relatively simple – step can help avoid the hassle and inconvenience of “crisis planning,” or quickly planning for Medicaid eligibility at the last minute. 

Under the applicable rules, money spent on prepaid funeral arrangements and an irrevocable burial contract is not “counted” as either part of an applicant’s assets or as a penalty-inducing transfer. Taking this step can also help alleviate the financial burden for surviving family members who will be left to foot the final bill after all assets have been depleted by nursing home costs. 

When funeral planning, be sure to find a reputable entity to complete the task – and purchase a spectrum of services necessary to cover the service and burial – including the headstone and engraving costs. Be sure to pay the entire bill in full, as payment plans or credit arrangements will not allow for the maximum possible exemption for Medicaid applicants. Lastly, be sure to work with a reputable Michigan elder law attorney before making any purchases, as the timing of the prepaid funeral plan purchase is important, particularly for couples. 

If you are considering long-term care planning and would like to discuss your options with a reputable Auburn Hills, Rochester Hills and Troy, Michigan elder law attorney, please contact Andrew Byers today: (248)301-1511.


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