MEDICAID RULES AND ELIGIBILITY RULES ON BURIAL INSURANCE
FuneralTrusts.com, a division of Union Information Services, Inc. (UIS)
disclaims any implied or actual warranties as to the accuracy of this
material or any liability with respect to it. These are
complex Tax, Medicaid, and legal implications associated
with final expense planning (BURIAL INSURANCE) with the
Funeral Trust Final Expense plans.
addition, Medicaid (Title 19) rules and laws governing these
issues change abruptly and without notice. Medicaid
eligibility rules can differ from state to state and before
taking any action, you should consult with an elder law
attorney or professional in your particular state for advice
on each particular situation.
Insurance funding should be reasonable and within the limits
of actual funeral costs. According to most states the
excess proceeds not spent on the funeral must go back to the
state. The Funeral Trust Burial Insurance plans marketed
should be used to fund funerals and not to be used to
promote asset protection to pass additional money to heirs.
Example of Wisconsin Rules
– Some States may vary on these rules. Again seek advice
from your particular state.
If the product being sold in Wisconsin is burial insurance, which the state says
cannot name a secondary beneficiary. Therefore if there are excess
proceeds after the funeral has been paid, these funds must
be paid to the Estate of the Insured for ESTATE RECOVERY
– BURIAL INSURANCE CONTRACTS DO NOT PERMIT NAMING A
SECONDARY BENEFICIARY. ANY PROCEEDS NOT CONSUMED BY FUNERAL
AND BURIAL EXPENSES ARE RETURNED TO THE ESTATE OF THE DECEASED. The States
in most cases must have the ability to recover any remaining
assets of a Medicaid patient. This refers to ESTATE
RECOVERY LAWS that each state has. Some recovery laws may
vary from state to state.
Do not encourage clients to over fund burial insurance with
the idea of passing additional funds to heirs.
Wisconsin Reference; MA Handbook 11.5.2
This memo clarifies Medicaid burial Insurance.
Operations Memo: #04-28 Date: June 1, 2004
insurance policy is a contract whose terms preclude the use
of its proceeds for anything other than payment of the
insured’s burial expenses. It is an insurance product sold
by a state licensed insurance company, and is typically
funded with a life insurance policy.
ownership of the life insurance policy is
irrevocably assigned by the policyholder to a funeral
expense trust established by the insurance company. The
trustee or trust administrator is required to pay all trust
proceeds toward the policyholder’s funeral expenses at the
time of the policyholder’s death. If a Trust’s proceeds
exceed burial costs, the excess must revert back to the
deceased person’s estate.
insurance policy is exempt if:
includes language that says it is irrevocable, and
states that all proceeds must be used for burial expenses.
purchase of burial insurance policy that meets the above
conditions is NOT a divestment because the purchaser is
presumed to receive fair market value.
is a reference from the State of Wisconsin. You should
check the rules in your state on burial insurance.