In my last post, I wrote about how individuals can irrevocably assign the death benefit of life insurance policies in order to obtain a funeral plan.

Some elders who need to qualify for Medicaid nursing home benefits in Michigan do not have life insurance, but may have savings that would disqualify them from Medicaid.  If a single person has more than $2,000 in cash or money in a bank, that person would be disqualified for Medicaid.  As such, in many cases, it will make sense to use some of what the Michigan Department of Human Services would consider excess money to purchase Medicaid compliant funeral and burial services, but only if the elder actually needs them.

If there is no life insurance, perhaps the best way to do this is to simply pay in advance for the funeral and burial services that will be needed in the future by entering into an irrevocable, pre-paid funeral contract.  If this is done correctly, the irrevocable funeral will be considered an excluded asset, meaning it is an asset one can still own while qualifying for nursing home Medicaid benefits.  In Michigan, the requirements for such an excluded funeral contract are:

1. The contract must irrevocable, meaning you cannot cancel it and get your money back

2. The contract must list the funeral and burial items and services that are being purchased

3. The value of the items and services purchased must equal the amount paid for the contract

4. The amount of the contract must not exceed $11,466.00

5. An original Irrevocable Funeral Contract Certification form must be completed and submitted with the Medicaid application

The items and services you can purchase under such a contract are broad, and include:

Services of the funeral director and staff

• Transportation of the body
• Embalming
• Cremation
• Clothing for the deceased
• Cost of a guest registry book
• Cost of an obituary
• A Burial plot or gravesite
• A, crypt, mausoleum, casket, urn, niche, or vault
• Headstones, markers or plaques
• Burial containers
• Opening and closing of the gravesite

Note that you cannot include the cost of a funeral luncheon or dinner in such a contact.

While one could spend up to $11,466.00, most people find they can purchase a nice service and other related burial items for $4,000.00 to $6,000.00.  For elders who want to be cremated, the cost of the funeral and burial services will be much less. 

Andrew Byers maintains an elder care practice in north Oakland County Michigan, and reviews funeral contracts as part of his Medicaid planning assistance services.