Welcome to the Funeral Planning CHOICES Blog
A family member is going on Medicaid in order to get the type of nursing home care he or she needs, and you are the one who has to make it happen.
Anyone who has been through this process is aware that the required “spend-down” of assets and the rules surrounding it are complicated and confusing. Often lost in the shuffle are funeral arrangements, which, if left until the family member has died, can result in a financial hardship for survivors.
Medicaid, however, does allow for recipients to establish an irrevocable prepaid funeral trust account, which will set aside money to pay for funeral and burial expenses. That money, with some limitations on what can be purchased, is considered exempt from the Medicaid spend-down.
This blog will seek to address questions that consumers may have about the process of preplanning and prepaying for a funeral in New Jersey. It will also address what is considered allowable in an irrevocable arrangement and what is not. In New Jersey, you must meet with a licensed funeral director to prearrange a funeral.
While Medicaid relies on federal money to operate, eligibility requirements are set by the state in which a potential recipient lives. In New Jersey, the Medicaid process is further diffused, with county boards of social services reviewing both Medicaid applications and trust documents.
While a funeral director may not know every decision a social services worker might make concerning a trust, he or she will be able to offer guidance on the majority of items that are allowable and others that would not be. For example, repasts (food during or following the funeral) cannot be funded through an irrevocable trust, but the handling of the remains, either through burial or cremation, can be.
Whatever trust money is left over following the death and burial or cremation of the decedent is then subject to asset recovery by the state, which will seek to claim the remaining funds under its Medicaid agreement with the recipient.
Funeral Planning CHOICES, endorsed by the New Jersey State Funeral Directors Association, offers consumers the opportunity to create an irrevocable trust through their funeral director. These funds are deposited into an interest-bearing account, where they will remain untouched until needed. The funds, along with any interest earned, are then used pay for services, with any leftover money being forwarded to the state as a partial reimbursement for the care provided.
While it is never pleasant to think about the day someone close to you dies that day is a practical concern, especially when trying to establish Medicaid eligibility, contact your funeral director, talk about what goods and services are best for your circumstances and prepare for the future.