The language surrounding a funeral prearrangement for someone who is seeking to qualify for SSI/Medicaid can seem confusing, but when broken down into simple definitions, it all begins to make sense.
Here is a list of some of the most commonly used terms when talking about the SSI/Medicaid process and preplanning a funeral:
Asset recovery. When the funeral of a person receiving Medicaid is paid for through an irrevocable trust account, there may be money left over. If there is, that money, by law, must be turned over to the State of New Jersey to reimburse a portion of the cost of the Medicaid care the person had received. This process is called “asset recovery.”
Funeral agent. A person can designate a “funeral agent” – someone to be responsible for their funeral and the disposition of their remains. A funeral agent can be appointed by including specific language in a will or a codicil to a will or by executing a form approved by the New Jersey Cemetery Board. That form can be located here.
General Price List. Often abbreviated as a GPL, the General Price List contains full pricing disclosures of services and merchandise offered by the funeral home. When you meet with the funeral director, this menu can serve as a guide as you make your decisions. Funeral directors are required to provide GPLs to everyone, regardless of whether the person is planning a funeral or just gathering information.
Intended Funeral Recipient. The intended funeral recipient, quite simply, is the person for whom the funeral prearrangements are being made. This term is often abbreviated as IFR.
Irrevocable. When preplanning a funeral, funds designated to pay for that funeral can be deposited into a trust account. For recipients seeking to qualify for SSI/Medicaid, the trust account must be set up irrevocably, meaning the money is not refundable; otherwise, it would affect the intended funeral recipient’s Medicaid status. Once the money is deposited, it cannot be accessed until the recipient dies. Any money left over in the account after the funeral is paid for is turned over to the State of New Jersey.
Irrevocable Absolute Assignment. When a person who is seeking to qualify for Medicaid has an insurance policy out of which funeral expenses will be paid, the funeral home is named as the policy’s owner and the proceeds are irrevocably assigned to the funeral home to be used for payment of funeral costs at the time of death. In the case of an irrevocable absolute assignment, the State of New Jersey is named the beneficiary of the policy and all excess money from the policy is claimed by the state.
Prepaid Funeral Trust. A person who wants to prearrange a funeral can set aside money in an interest-bearing trust account designated specifically for that purpose. That money is paid out to the funeral home once the person dies. In cases where the intended funeral recipient is seeking to qualify for Medicaid, the trust account is considered irrevocable (see definition above).
Spend-down. The process by which a person sheds assets in anticipation of going on Medicaid is called a “spend-down.” Medicaid demands that a person’s total assets be under $2,000, with income limited as well, before they can qualify for the program. Part of that process can be devoting assets in a trust or insurance policy for a funeral.
Statement of Funeral Goods and Services Selected. When a person makes funeral arrangements, the choices they make will be documented on a form called the Statement of Funeral Goods and Services Selected. This form gives the details of arrangements made and all the estimated costs associated with those choices.