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A Gift to your loved ones: New rules for Medicaid-compliant prepaid burial plans make it easier to plan for your final arrangements

With only a week left until Christmas Day, do you need a last-minute gift idea? Although admittedly unconventional, I encourage you to visit with the funeral home of your choice to set up a prepaid funeral plan. During this process you will make decisions about your final arrangements and will also set aside funds to pay for those arrangements. Although not a tangible gift you can place under the Christmas tree and watch with delight as your loved one unwraps it, you will have the peace of mind that your loved ones will not be burdened by the cost and stress of hurried decision-making upon your passing.

During the last legislative session in Bismarck, our lawmakers passed a new Medicaid law relaxing the rules about prepaid funeral plans and Medicaid eligibility. The law removed the dollar limit of the amount you can set aside for your funeral while still maintaining eligibility for Medicaid in the event you run out of funds to pay for the nursing home. Ben Slind of Thompson-Larson Funeral Home explains, “Before August of 2019 there was only a certain amount you could set aside for your funeral. Today you can fully fund your funeral as long as it is placed with a funeral home and that account is an irrevocable, itemized funeral contract.”

When I visit with clients about the Medicaid rules and help them make decisions to protect their assets from the high cost of nursing home care, I always advise them to contact the funeral home of their choice to establish a prepaid funeral plan. This ensures money will be available to pay for their funeral even if they are in the nursing home, on Medicaid, and own no other assets at the time of their passing. It also provides important information to your loved ones about your wishes for the details of your final arrangements such as your choices for the disposition of your body, casket, vault, burial site, obituary content, and service details such as music and refreshments. Taking this step is one of the easiest and most painless parts of Medicaid planning when compared to making legal decisions about other Medicaid planning tools such as navigating the five-year Medicaid lookback period with life estate deeds, irrevocable trusts, and gifting.

The Medicaid rules, which are set at both the federal and state levels, typically only become more restrictive as the years go by, so this recent change is unexpectedly good news. Families will no longer be left scrambling to pay the difference in cost between a Medicaid-compliant prepaid funeral plan and the actual cost of all the components of a loved one’s final arrangements. Jackie Thomas of Thomas Family Funeral Home explains, “This change in the law is very beneficial to a family who needs to spend down assets to qualify for Medicaid because the family can now pay for a complete arrangement of their choice.”

You should still visit with the funeral home even if you already have a prepaid burial plan. Your plan may need to be tweaked to meet the new requirements for irrevocability and itemization. Additionally, you may be able to add funds to your plan to fully pay for your final arrangements. The funeral home can walk you through the particulars of your situation and the new rules to make a recommendation to update your plan.

“Preplanning provides peace of mind and eliminates so much stress, burden and decision-making at the time of a loved one’s death. It is the most loving gift a person can leave for their family,” Thomas explains. Consider setting up or updating your prepaid funeral plan as you complete your holiday shopping this year.

This article does not constitute legal advice. Each individual should consult his or her own attorney.