Medical Assistance and Pre-funding Funeral or Cremation Expenses
As we age and begin to look at financial help many of us will turn to MA (Minnesota Medical Assistance) or SSI (Supplemental Security Income). MA is a State of Minnesota program and SSI is a federal program. Both programs are administered by the county of residence. Both programs are complicated with specific eligibility requirements. Individuals should consult with your county social services’ office at the earliest time possible.
MA and SSI have specific allowances when putting aside monies for future funeral expenses. These allowances depend on when the individual is applying for MA or SSI and the choice of the pre-funding option for the funeral expenses.
There are essentially two types of MA/SSI applications:
Type #1: The individual making application for MA/SSI is not currently receiving any medical assistance, and not asking for retro-active medical assistance, and currently paying their own living expenses;
Type #2: the individual applying for MA/SSI is already receiving medical assistance benefits or asking for retro-active medical assistance benefits.
There are two pre-funding options with variations of both:
Option #1: A life insurance product;
Option #2: A bank trust. Depending on the application option and the choice of funding will determine how much money can be set aside for the funeral as a sheltered asset.
First let me define a sheltered asset. In the State of Minnesota in order to be eligible for Medical Assistance the applying individual’s total assets cannot exceed $3000.00. However state law allows certain assets to be sheltered, or off-limits, when determining MA eligibility. Some of those sheltered assets are: a homesteaded house for a spouse not in a nursing home; or an at-home spouse’s income; or a pre-funded funeral account. In other words, when funeral expenses are paid in advance and placed in a state qualified account they become untouchable when the county officer is considering MA eligibility for the applicant.
The chart below gives a brief overview of the asset exclusions available depending on the application option and the funding choice as it pertains to pre-funding funeral expenses.
Application Types as Described Above/ Pre-funding Option/ Asset Exclusion
Type #1/ Insurance product/ Unlimited funeral expenses
Type #1/ Irrevocable Bank Trust/ $2000.00 plus burial space items
Type #2/ Insurance product/ $1500.00 plus burial space items
Type #2/ Irrevocable Bank Trust/ $1500.00 plus burial space items
Burial space items include: casket, urn, burial vault, opening of the grave, cremation niche, grave marker, and crematory fee.
Any monies placed into a pre-funded funeral account are irrevocably earmarked for the merchandise and professional services selected at the time of the pre-arrangement. These pre-funded funeral accounts are all interest bearing and the interest that accrues in these accounts is also considered as an excluded asset.
The one thing to remember about excluded assets in a funeral trust is that if monies are left over after the final funeral expense are paid that money will be claimed by the county of residence. The reasoning behind this is that the county has been supplementing the care of the individual and the estate of the individual should not profit at the State of Minnesota’s expense.
For more information on medical Assistance in the State of Minnesota click on this link:
Minnesota Department of Human Services