Medicaid Policy
Medicaid Policy
When the individual owns a pre-need funeral contract, always obtain a copy of the contract. Utah law requires every pre-need funeral contract sold in Utah to be evidenced by a written contract (58-9-701 UCA). The contract form must be approved by the State Division of Occupational and Professional Licensing although it does not always say that in the contract.
A pre-need funeral contract must identify that the contract is a guaranteed product contract. The seller cannot revoke the contract except in the event of nonpayment and under terms and conditions clearly stated in the contract. The buyer cannot revoke the contract unless there is a substantial breach by the provider, substantial evidence the provider cannot or will not provide the property or services, or under terms and conditions clearly stated in the contract. The contract may contain a mutual rescission clause (the state's model contract includes this.)
Every pre-need contract must also contain a clause similar to:
"Notice: Under Federal regulations, a Medicaid recipient whose pre-need contract is revoked, cancelled, or mutually rescinded may become ineligible for Medicaid benefits. Before permitting or causing your pre-need agreement to be revoked, canceled or rescinded, you should seek the advice of an attorney or a Medicaid representative."
Examine the contract
Decide if the contract is revocable or salable, or irrevocable and not salable.
Utah law permits a prepaid pre-need funeral contract entered into on or after May 10, 1983 to be revocable or irrevocable at the option of the buyer. The contract must explain under what conditions a contract can be revoked. A contract entered into before May 10, 1983 is revocable.
The contract may be salable depending on the wording in the assignment clause.
The contract must cover just burial spaces or just burial related expenses or both.
The contract must specifically identify the burial spaces, the burial/funeral services and the cost of each. Contracts in Utah must be a guaranteed product contract. This means the funeral provider guarantees the provision of the services and items specifically identified in the contract.
The amount the individual paid for the contract must equal the cost of the spaces and services listed in the contract. Utah law requires that the contract show what is being purchased and the price of items and services. If the payment for the contract includes an amount to be used for a purpose other than funeral or burial expenses, that amount is subject to treatment as a transfer of assets for less than fair market value.
If you do not receive documents that comply with those requirements, you cannot make an eligibility decision about the pre-need funeral contract. Ask the individual to give you the pre-need funeral contract that meets those requirements.
Enforcing the statutory requirements for pre-need contracts is not your responsibility. This information is here so that you can ask for the information you need to apply the rules in section 594.
Use the rules for pre-need funeral contracts in 594-2 through 594-3 when:
An individual revocably or irrevocably contracts with a provider for funeral goods and services; and
The individual funds the contract by prepaying for the goods and services or pays in installments; and
The funeral provider subsequently places the funds in a trust.
Use the rules for life insurance funded pre-need funeral contracts in 594-4 when a individual funds a pre-need funeral contract by purchasing a life insurance policy and assigns, revocably or irrevocably, the proceeds or ownership of the policy to the funeral provider.