Do funeral expenses count toward spend-down strategies?
Updated: Sep 27
When it comes to qualifying for Medicaid, there are ways to meet the maximum income requirements even if you or your loved one receive more—whether regularly or on occasion. These spend-down strategies help maintain the helpful benefits of Medicaid and pick away at particular debts.
These debts include medical bills but may also involve irrevocable accounts. One such account is a funeral pre-need where you pay off some or all of your future funeral so that grieving loved ones do not have to scramble for those costs.
Funeral expenses in New York
According to the American Council on Aging, New York is only one of two states that disallow irrevocable funeral trusts from lowering countable assets to qualify for Medicaid. That does not, however, mean it is impossible. New York allows for irrevocable pre-need agreements and pre-paid funeral contracts.
Differences between funeral agreements and trusts
The main difference is that a funeral home does not directly handle an irrevocable funeral trust. A pre-need agreement is a contract you make with the funeral home, using their service rates at the time. The benefit is the rates stated in the agreement do not shift over time. Though if a funeral home goes out of business prior to you needing that money, that may complicate things.
The important aspect of these agreements is that they are non-refundable. By creating an irrevocable account, you essentially remove any money deposited into it as your assets. Your needs and preferences are unique to your situation and it may help to investigate all estate planning options when determining what Medicaid spend-down strategy works for you and your family.