Medicaid Policy                                                                 

592-9 Burial Funds Used for Another Purpose

Effective Date: August 1, 2007

No Previous Policy

 

Excluded burial funds used for another purpose

If an individual uses excluded burial funds for another purpose, the funds used for the other purpose are no longer burial funds.  The individual may have to change or correct the amount of the original designation.

 

Change in form of excluded burial funds

Changing excluded burial funds from one form to another is not use for another purpose. For example a person uses their designated funds in a certificate of deposit to buy an irrevocable pre-need funeral contract.

 

                      Loans against burial funds

A loan against the cash value of a life insurance policy that has been designated for burial expenses is not use for another purpose if the individual uses the money from the loan to purchase another burial asset.

 

Use of a burial fund as collateral for a loan when the funds are not used to buy another type of burial asset is a use for another purpose because the loan is an encumbrance on the funds.  The funds are not available for the individual’s burial while they are encumbered and cannot be considered set aside for the individual’s burial.

 

Treatment of Amount Used for Another Purpose

 

If an individual uses excluded burial funds for another purpose, the amount of excluded burial funds used is a countable asset.  Check the individual’s asset eligibility beginning the first of the month after the month in which the individual used the burial funds for another purpose.

 

If the individual transferred the funds to someone else, use the transfer of asset rules (371) to decide if there is a penalty.

If the individual retained the funds or purchased a countable resource, decide if the individual’s countable assets are more than the asset eligibility level for the following month.

 

Order of Use of Designated Funds and Interest Used for Another Purpose

 

If the individual uses excluded and non excluded burial funds for another purpose, assume the individual used the burial funds in this order:

 

non excluded interest,

non excluded originally designated amounts,

excluded interest,

excluded originally designated amounts.

 

This order is important in deciding if the individual must re-designate the remaining burial funds.