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Using a Prepaid Funeral Contract to Spend Down Assets for Medicaid

No one truly wants to think about his or her own death, however, a little preparation in the form of a prepaid funeral contract can end up being very useful. In addition to easing the burden on your family after your death, a prepaid funeral contract can also be a good way to spend down assets in order to qualify for Medicaid.

A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for: embalming and restoration, room for the funeral service, casket, vault or grave liner, cremation, transportation, permits, headstones, death certificates, and obituaries, among other things.

One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price, and therefore possibly saving your family money. You are also alleviating the burden on your family of having to make arrangements after you have passed on, which can often be difficult emotionally as well as time-consuming. Finally, if you are planning on applying for Medicaid, a prepaid funeral contract can be a way to spend down your assets when used correctly.

In Pennsylvania, Medicaid applicants must spend down their available assets until they reach the qualifying level (either $2,400 or $8000, depending on your gross monthly income). By purchasing a prepaid funeral contract, you can turn available assets into an exempt asset that won’t affect your eligibility. In order for a prepaid funeral contract to be exempt from Medicaid asset rules, the contract must be irrevocable. That means you can’t change it or cancel it once it is signed. Additionally, the dollar amount of the contract that will be considered exempt differs from county to county throughout the state, so it is important to consult with an experienced elder law attorney to make sure you are taking full advantage of this exemption.

Finally, before purchasing a prepaid funeral and signing a contract, you should shop around and compare prices to make sure it is the right contract for you. Buyers need to be careful that they are buying from a reputable company and need to ask for a price list to make sure they are not overpaying.

For help in understanding the benefits of prepaid funeral planning, as well as the complex Medicaid rules that apply to spending down your assets, contact the knowledgeable attorneys at Zacharia Brown. You may schedule an appointment by visiting our website at or by calling 724.942.6200.


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