Does Medicaid Pay for Cremation or Other Funeral Costs?
Losing someone we love is difficult enough without the added stress of the high cost of funerals and memorial services that can accompany it. Funeral expenses continue to rise year after year, and in 2021, the average cost for a typical funeral ranges between $9,500.00 and $12,500.00.
These expenses generally include costs for transporting the remains to the funeral home, embalming, a casket, a viewing service, burial, and other miscellaneous service or preparation fees. For a funeral with cremation, the average cost runs between $6,000.00 and $7,000.00.
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Does Medicaid Offer Funeral Benefits?
Because Medicaid funds are managed by the states, coverage for cremation or other funeral expenses depends on which state the beneficiary lives in. There are some states that offer financial assistance for a funeral and burial or cremation through government agencies that help people who are on Medicaid.
- In Colorado, Medicaid beneficiaries can be eligible for $1,500.00 in funeral assistance.
- In Indiana, people who are in certain Medicaid categories can receive up to $800.00 for a cemetery plot and $1,200.00 for funeral expenses.
- In the state of Wisconsin, the Funeral and Cemetery Aids Program refund up to $1,500.00 for funeral expenses to people who are on Medicaid.
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Do Medicare Benefits Help Cover Funeral Expenses?
What happens if you don’t have a life insurance policy or savings account to help out with expenses? Due to the fact that funeral expenses aren’t medical expenses, neither Original Medicare Parts A and B nor Medicare Advantage Part C, cover them.
However, there is one type of Medicare Advantage plan that may offer some financial assistance. This plan is called a Medicare Medical Savings Account (MSA). An MSA is a high-deductible Medicare Advantage plan that has a savings account attached.
Medicare deposits a set amount of money every year into this savings account. You can then use money from this account to pay for health care services that Medicare covers. You must pay taxes on money used from this account if the items purchased aren’t included in your Medicare coverage.
These types of charges don’t count toward your deductible, so may end up costing you more. When a beneficiary of an MSA dies, the money that is still in the account stays in the estate. In instances like this, the money could be used to pay for funeral expenses. You may be eligible for a Medicare Medical Savings Account if you are eligible for Medicare, and you don’t have end-stage renal disease.
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Estate Planning and Funeral Costs
Though it may be an uncomfortable conversation, it’s a good idea to talk to your family about final arrangements. Understanding your personal choices makes it easier for family members to carry out your wishes, including your preference for burial or cremation.
In addition to cultural, religious and time reasons for choosing cremation, the cost is a big factor. The American Council on Aging (ACOA) advises that the average cost of a funeral in the U.S. in 2021 is about $9,000. This is more than double the cost of a typical cremation, which can range anywhere between $800 and $4,000, according to the Cremation Institute.
While it may not be a pleasant thought, planning your own funeral and putting money aside for the cost can help family members cope better during a time of great stress. But, you may wonder if Medicare or Medicaid services can help cover any funeral expenses.
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Government Assisted Death Benefits
Even though Medicare and Medicaid don’t help with funeral expenses, you might be able to find assistance through other government agencies in your state or the county you reside in. You can get information from any of the following agencies or people who are applicable to your situation:
- A labor or trade union
- The armed forces
- The Veterans Administration
- A local funeral director
- A county or state administrator
The Social Security Administration also gives a small sum of money for a death benefit to the families of the deceased if they were receiving Social Security benefits.
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Irrevocable Funeral Trust
In all but two states (Michigan and New York), funds you put into an irrevocable funeral trust (IFT) would not count as an asset for purposes of determining your eligibility for Medicaid. Irrevocable means the money put in the trust is not refundable. The trust cannot be changed or canceled.
For purposes of Medicare eligibility, the funds no longer belong to you as they are earmarked for funeral, burial, memorial, or other final expenses. Some states require a Goods and Services Form where these expenses would be itemized. Most states insist that the state be named as a residual beneficiary of the IFT. In that case, the state is entitled to any money left over after the itemized expenses are paid.
Prepaid (pre-need) Contract
The advantage of an IFT versus a prepaid funeral contract is that the IFT does not restrict you to using a particular funeral home. However, some people prefer to make prepaid arrangements with a funeral home and lock in the price. This prepaid contract is also known as a pre-need contract.
Michigan and New York, the only states that do not lower countable assets based on an IFT, do allow for an irrevocable pre-need contract. A cremation contract is one type of pre-need contract.
Other Funeral Cost Assistance
Some states offer special programs to cover burial or cremation costs if you are indigent and your estate cannot cover these expenses. To find out if this is applicable in your state, search the internet for [your state name] Medicaid funeral expenses.
For example, in Connecticut, the Department of Social Services will pay up to $1,200, reduced by funds available from certain sources, such as an IFT or life insurance policy. In Colorado, the Department of Human Services helps low-income residents by paying up to $1,500 to the cremation or burial service provider.
Burial and Cremation Resources
Your primary resource for Medicaid is medicaid.gov. If you are dually eligible and need to check Medicare coverage as well, medicare.gov is where you can find extensive information on Medicare insurance.
Note that Medicare coverage does not include benefits for burial or cremation. If you get your Medicare insurance through a Medicare Advantage plan, you can check any extra benefits with your plan administrator.
To read more about irrevocable funeral trusts, visit the ACOA. The Cremation Association of North America offers cremation information and recommended links for additional resources.
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