What is Not Allowed in a Prearrangement for SSI/Medicaid Recipients

What is Not Allowed in a Prearrangement for SSI/Medicaid Recipients

The list of items that cannot be included in a preplanned funeral arrangement in which the intended funeral recipient is seeking to qualify for SSI/Medicaid has expanded over the years.

Preplanning and prepaying for a funeral while seeking to qualify for SSI/Medicaid is part of what is called a "spend-down." That spend-down is the process in which a person’s assets are lowered until they reach the level where their net worth is less than the threshold for Medicaid eligibility. Establishing an irrevocable prepaid funeral trust account for funeral expenses can be part of that spend-down process.

While there is no financial “cap” on these types of arrangements, what can be included and what cannot are sometimes tricky.

In 2007, New Jersey tightened its restrictions on prepaid funeral arrangements where the recipient is seeking to qualify for SSI/Medicaid not allowing repasts and flowers. That limitation also stated that travel costs for out-of-state relatives to attend funerals or for family members to accompany remains for long distances for final disposition are also not permitted.

In 2018, the position on non-allowed items was further refined, disallowing:

  • Food, including repasts (a meal following the funeral)
  • Flowers and/or car to transport flowers

    While the inclusion of flowers was previously prohibited, the policy is expanded to prohibit transportation and disposal.  

  • Travel expenses (either for individuals to attend the funeral or for a funeral director to accompany the remains)

    While the inclusion of travel expenses to accompany the remains was previously prohibited, the policy is expanded to prohibit travel expenses for individuals to attend the funeral. A family limousine is permitted. 

  • Gratuities
  • Cost of clothing, jewelry, shoes, etc. for the living
  • Other goods or services for the living

    The New Jersey State Funeral Directors Association currently interprets this category to include video tributes and keepsakes such as jewelry and memorial products

Assets belonging to the funeral recipient cannot be used to pay for these items. Keep in mind, however, that family members may, at the time of death, pay for these services themselves. For example, family members or friends are allowed to send flowers to the funeral. A family member can also arrange for a repast as long as the funeral recipient's funds are not used to pay for it.

When you speak to your funeral director about an irrevocable prearrangement, they will guide and advise you on the current restrictions.