Medicaid/SSI Irrevocable

New York State Law also mandates that preneed burial trusts for applicants or recipients of SSI/Medicaid MUST be IRREVOCABLE. This means that the prearrangement MAY NOT be canceled prior to death. It may, however, be transferred to a different funeral home at any time.

Aside from being revocable or irrevocable, there are essentially two types of preneed agreements. Following is a description of each:

GUARANTEED

The funeral home may offer a guaranteed preneed agreement whereby the price of the funeral services and merchandise is guaranteed not to exceed the balance in your trust account at the time that the funeral is provided. The Guarantee will most likely be null and void if withdrawals are made from the trust account and generally will not apply to certain items such as cemetery costs, clergy fees, death certificate fees, etc. Please note, however, that the funeral home may not charge more than the actual cost for these third party items.

Top 10 Things You Should Know About Medicaid, SSI and Irrevocable Trusts

1. Medicaid is a joint State, Federal and County program, which provides medical assistance to lower income individuals with limited assets.
    
2. Supplemental Security Income is a federally administered program to assist individuals who have reached an age of 65 + or have been legally classified as blind or disabled.
    
3. 2008 Medicaid Resource Limits
   1 Person Household – $13,050
   2 Person Household – $19,200
    
4. 2008 SSI Resource Limits:
   1 Person Household - $2,000
   2 Person Household - $3,000
    
5. An individual MAY NOT have an irrevocable trust agreement unless they have applied for or are currently receiving Medicaid benefits.
    
6. An irrevocable trust may be transferred to a different funeral home at any time.
    
7. If there is an overage after funeral services have been performed, the funds must be sent to the county DSS where the beneficiary resided and received assitance.
    
8. As of January 1, 1997 all prearrangements made for applicants or recipients of SSI/Medicaid must be irrevocable.
    
9. Advertisements for prearrangement services must include a disclosure explaining the irrevocable nature of contracts prepared for Medicaid/SSI recipients or applicants.
    
10. As a member of the PrePlan^SM Trust Program, you can rest assured knowing that all of our prearrangement contracts are in 100% compliance of Medicaid/SSI rules and regulations.

How to Qualify

Any individual who is an applicant or recipient of SSI/Medicaid, and in the "spend down" process, should meet with a funeral director. During a prearrangement conference, the individuals should select which funeral services and merchandise he or she desires as disclosed on a "General Price List." The funeral director will then note these selections on an itemized statement (commonly known as a "Preneed Itemization Statement") which will reflect the current retail value of the merchandise and services selected. The next step is funding the arrangements. Funeral prearrangements will qualify as a prepaid funeral resource exclusion if the funds are placed in an irrevocable prepaid funeral trust account.

Meaning of Irrevocability

A trust which is titled "irrevocable" means that any refund, withdrawal or other disposition of the deposits on account plus accrued interest, for any purpose, will and must legally be refused by the funeral director and/or funeral trust or financial institution.

Payments to Purchasers

Purchasers who have entered into irrevocable burial trusts may only use the funds for payment of funeral services and merchandise upon the death of the intended funeral recipient. Any excess in the trust account after payment of funeral expenses must be returned to the local county Social Services Department in which the intended funeral recipient resided and received assistance.

 

Requirements

All documentation generated by this process must meet stringent federal and state requirements for resource qualification and funeral service disclosures. Social Services personnel require evidence that the funeral arrangements exist and that they are linked irrevocably to the funding vehicle. Additionally, all of the documentation generated by the funeral home must meet Federal Trade Commission standards for price and itemization disclosure, and all of the provisions of Section 453 of the New York State General Business Law.

Consumer Protections

The 1996 amendment to the Social Services law which allows the creation of irrevocable trusts for applicants/recipients of SSI and/or Medicaid also sets high business and ethical standards for prepaid funeral arrangements. The following consumer protections were built into the law with that amendment.

Portability

The law allows the consumer to change funeral homes at any time prior to death without effecting the irrevocability of the arrangements themselves. If such a transfer is desired, a new irrevocable preneed agreement with the newly selected funeral home must be generated. The transfer of irrevocable preneed funds may, however, ONLY be made payable to another funeral home, or another funeral trust program.

Can irrevocable preneed agreements be modified at the time of need?

Some funeral arrangements may be modified at the time of need, however, no additions or upgrades from the originally selected merchandise and services can be made. Any remaining funds in an irrevocable account must be returned to the Social Services Department in the county where the beneficiary resided and was receiving assistance.

Can irrevocable preneed agreements be modified at time of need?

Some funeral arrangements may be modified at the time of need, however, no additions or upgrades from the originally selected merchandise and services can be made. Any remaining funds in an irrevocable account must be returned to the Social Services Department in the county where the beneficiary resided and was receiving assistance.

Can we still use the personal needs account to fund the burial trust?

No. The funeral director should not be involved in the use of the Personal Needs Account. A Purchaser of an irrevocable burial trust may still maintain the maximum allowable Medicaid eligibility personal resource level, in addition to the irrevocable trust. That level is currently $3,550 per individual or $5,150 per couple.

Are there disclosures that must be printed on a funeral firm’s advertising materials regarding prearrangements?

Yes. Any promotional material printed must contain language disclosing the irrevocable nature of burial trusts established for individuals receiving or applying for supplemental security income or Medicaid assistance.