Preplanning for Medicaid/SSI

Special Consideration for Medicaid/SSI Applicants & Recipients

All citizens – regardless of income – are entitled to and deserving of both a proper funeral service and a burial with dignity and respect. In fact, federal and state laws support this guiding principle in a number of ways.

First, any person applying for Medicaid/SSI can set aside funds for the sole purpose of paying their funeral/burial expenses – as well as the funeral/burial of immediate family members – as part of the spend-down process to Medicaid/SSI eligibility. The funeral/burial funds set aside will not be counted as part of the individual’s financial resources. A Medicaid/SSI eligible individual must first notify his or her caseworker that funds will be set aside to pay their funeral/burial tax expenses.

Second, New York State law requires that 100% of these funeral/burial funds be placed in an irrevocable trust account, ensuring they will be available when needed and used for no other purpose than what they were intended: for the funeral/burial of the account beneficiary.

An applicant/recipient of Medicaid/SSI may also set aside funds in irrevocable funeral trust accounts for the following immediate family members:

  • Spouse
  • Children
  • Step-Children
  • Siblings
  • Parents
  • and spouses of those individuals listed above

Please note that when the original purchaser passes away, the beneficiary (family member) becomes the new purchaser and taxpayer. If there is any excess money in the preneed account after the funeral and burial charges have been paid, the overage will go to the county where the decedent was receiving benefits.

The funds used to establish an irrevocable preneed funeral account must be used only for reasonable and common funeral expenses for such things as professional services, transportation, facilities and merchandise, as well as cash advances to cover the cemetery and other related charges.

Finally, the individual has the right to use any funeral home they choose, and may be changed at any time.

Commonly Asked Questions: Preneed Accounts for Applicants or Recipients of Medicaid/SSI

Q: What happens if I currently have a revocable preneed account, but I am now applying for Medicaid or SSI?

A: When applying for Medicaid/SSI, your caseworker should advise you that the revocable preneed account must be converted to an irrevocable account to ensure that your eligibility for benefits is not jeopardized.

Q: How does my life insurance policy affect my Medicaid eligibility?

A: The face value of any life insurance policy(ies) over $1,500 will be counted as an asset in determining your Medicaid eligibiity.

Q. Can an overage in an irrevocable preneed trust account be used to fund additional services or merchandise?

A: No, If the current account balance exceeds the actual cost of the services and merchandise originally selected, the overage must be returned to the county.

Q: Can my irrevocable preneed agreement be modified at the time of need?

A: Yes. However, the new items must be equal or lesser value, and must qualify as funeral merchandise and services. If there is an overage, the funds may not be depleted to cover additional merchandise and services, but instead must be returned to the county.

Q: Which county Social Services Department receives the overage in an irrevocable trust account?

A: If there’s an overage after the final funeral charges have been paid, the overage must be sent to the county where the recipient was receiving public assistance at their time of death.

Q: Can an irrevocable preneed funeral account be split into separate accounts in New York State?

A: No. The full amount of an irrevocable preneed agreement must be placed into a single preneed trust account.

Q: Which items may not be included on the preneed itemization form for an irrevocable preneed account?

A: As an applicant or recipient of Medicaid/SSI, you may only prearrange “reasonable and common” funeral merchandise and service expenses that are related to the funeral. Examples of items not permitted by NYS Department of Health include: airline tickets, funeral luncheons, charitable donations, and cash gifts. If there are any questionable items, you should speak to a social worker to obtain prior approval.

Q: Who may authorize a transfer of funds to another funeral home?

A: Before death occurs, only the purchaser and his/her legal representative may authorize a transfer of an irrevocable preneed account to another funeral home.

Q: How does the law affect pre-existing contracts of Medicaid applicants and recipients?

A: If you had both a pre-existing agreement and were receiving benefits prior to January 1, 1997, your account may remain revocable, but must still be recertified annually by County Social Services personnel.

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