Prepaid Funeral Contracts & Burial Plots - A Guide for Medicaid Applicants

Prepaid Funeral Contracts & Burial Plots
A Guide for Medicaid Applicants
March 2007

What is a prepaid funeral contract?
Should I buy an irrevocable funeral contract?
Should I buy a prepaid burial plot?
If I decide to buy a prepaid funeral contract, what should I look for?
What happens to the money I give the funeral home?
A consumer's checklist for prepaid funerals
For more information

If you are applying for Medicaid (Title 19), you may have an irrevocable funeral contract worth up to $5,400 and/or a burial plot, neither of which will count as an asset for Medicaid purposes.

What is a prepaid funeral contract?

A prepaid funeral contract is a legal agreement which says you will pay now (with money or securities) for funeral services that will be needed sometime in the future. This contract may include the funeral, burial, cremation, other services and /or merchandise.

A prepaid funeral contract may be revocable or irrevocable. Revocable means you may cancel the contract and get most of your money back. Irrevocable means you cannot cancel the contract, but you may transfer it to another funeral home if you choose.

Should I buy an irrevocable funeral contract?

The decision whether or not you should buy an irrevocable funeral contract to help you qualify for Medicaid is up to you. There is no right or wrong answer.

If you are applying for Medicaid, here are some things to consider:

If your assets are more than the asset limit for Medicaid, you may need to reduce ("spend down") some of your assets. You may spend down your assets any way you want, including buying a funeral contract, as long as you do not give your money away (gifts or donations). You cannot pay more than the fair market value for something. For example, you paid $1000 to your church for a calendar or other inexpensive item. DSS would probably see this as a gift or donation which could affect when you could qualify for Medicaid.
You may spend up to $5,400 for an irrevocable funeral contract in Connecticut. A prepaid irrevocable funeral contract is not counted as an asset for Medicaid purposes. If you decide to buy a funeral contract and are applying for Medicaid, it is in your best interest to buy an irrevocable contract.
A prepaid funeral contract lets you make your own funeral arrangements in advance, rather than having the town, state or your family pay for your funeral. The town or state will not pay more than $1,800 for the burial of an indigent person.
You can transfer an irrevocable contract to a different funeral home if you move or do not want to use the services of the original funeral home. However, you cannot cancel and get your money back if you buy an irrevocable contract.

Should I buy a prepaid burial plot?

The decision whether or not you buy a prepaid burial plot to help you qualify for Medicaid is up to you. Here are a few things to consider:

A burial plot includes the purchase of a grave site, opening and closing of a grave site, cremation urn, casket, outer burial container and a headstone or marker. There is no limit on how much you can spend on a burial plot.
A prepaid burial plot is not counted as an asset for Medicaid purposes. (See "spend down" discussion above).
If the Medicaid recipient or applicant is in a nursing home or on the Connecticut Home Care Program for Elders (Medicaid Waiver), the burial plots of the applicant's spouse and immediate family are also not counted as an asset for Title 19 purposes. "Immediate family" includes:
o    a natural, adopted or step-child of the Medicaid recipient, regardless of age;
o    a natural or adoptive parent of the Medicaid recipient;
o    a sibling of the assistance unit.

If I decide to buy a prepaid funeral contract, what should I look for?

A prepaid funeral contract costs a great amount of money. Before you buy, here are some things to consider.

Find out about the funeral home. Make sure it is reputable, financially stable, and gives you the information you need to make informed decisions.

Ask your family and friends for recommendations. Make sure you feel comfortable with the people at the funeral home. Be a comparison shopper and interview a few different homes.

Make sure you really need all the services that are being offered. Find out what services and goods are included and decide if you need them. The cost of the contract could be reduced if you do not need all of the services and goods. For example, if you wish to be cremated, you would not need to pay for embalming.

Be prepared to discuss a contract when you visit the funeral home. It may be helpful to take along the checklist below. If you can, take a supportive friend or relative.

What happens to the money I give the funeral home?

The money you give the funeral home must be placed in an escrow account and invested for your benefit. The funeral home must tell you who the escrow agent is and give you an annual statement of the amount of money credited to your account.

A consumer's checklist for prepaid funerals

This helpful checklist was prepared by the Attorney General's Office.

Before purchasing...

Get the prices of the goods and services. A copy of the general price list must be provided. You can get it in person or ask for the prices on the phone.
Get the separate price lists for caskets, vaults, and cremation urns. These lists must also be provided.
Get a written statement of the goods and services you select. This is important for comparison shopping and holding the funeral home accountable.
If you choose to take care of some services yourself, check to see if there are charges for these services in the fees. Ask the funeral director to explain the services included in the funeral home's fees and insist the fee be reduced if you make any of the arrangements yourself.
It is not always clear what goods or services are guaranteed, or how excess funds will be handled. Be sure that any contract you sign clearly specifies the responsibilities of the funeral home.
Ask the funeral director to describe the investment risk and rate of return of every option. Funds placed in escrow for prepaid funeral contracts should be managed as carefully as any other investment you make.
Contact the escrow agents directly to ask about their management policies.

After purchasing...

Give a trusted relative, friend, lawyer or doctor a copy of the contract.
If you go to a nursing home or hospital, give them a copy of the contract and name of the funeral home.
If you believe you may have been treated unfairly, call the CONSUMER LAW PROJECT FOR ELDERS (CLPE). 1-800-296-1467. Monday - Friday 9 am - 5 pm.

For more information:

Consumer Law Project for Elders 1-800-296-1467 or
Statewide Legal Services: (860) 344-0380 (Central Connecticut and Middletown area) 1-800-453-3320 (All other regions)

This document was produced by the Legal Assistance Resource Center of CT in cooperation with CT Legal Services, Greater Hartford Legal Aid, New Haven Legal Assistance Association, and Statewide Legal Services.

The information in this document is based on laws in CT as of March 2007. We hope that the information is helpful. It is not intended as legal advice for an individual situation. If you need further help and have not done so already, please call Statewide Legal Services (see above) or contact an attorney.