Medicaid Policy
Medicaid Policy
No Previous Policy
Revocable or Salable Contracts
Count the value of a pre-need funeral contract that is revocable or salable if there are not conditions for the sale that present a significant hardship. Language in the contract should say whether the contract can be revoked or sold.
The value of the revocable contract is the amount payable to the owner upon revocation. The value of a salable contract that is irrevocable is the fair market value.
Use the burial space policy (591) to exclude any portion of the contract that represents the purchase of burial spaces.
Use the burial fund policy (592) to decide if any value of the contract can be excluded as burial funds.
Count as an asset the value of the contract that is not excluded as a burial space or burial fund.
Conditions on Revocability or Salability that Present Significant Hardship
A pre-need funeral contract, even if it appears to be revocable or salable, may have conditions attached to its revocability or salability. Exclude the value of the contract if either of these conditions exists:
A significant hardship may result if the conditions required for revoking or selling a pre-need funeral contract places an unrealistic demand on the buyer such as moving out of state. If you need help with this decision, ask the program specialist to decide if the demand is unrealistic.
If the only way a buyer can revoke the contract is in the event of a substantial breach by the funeral provider or evidence the provider cannot or will not provide the goods and services, then consider the contract irrevocable.
If the contract has a mutual rescission clause, the contract is revocable. However, a significant hardship may result if state law or contractual terms require the mutual consent of the buyer and seller to revoke or sell a contract. If such clause has not been struck out or amended, ask for a statement from the provider that says the provider will not agree to rescind the contract. If the seller will not consent to revoke the contract, or will consent only under conditions that would pose a significant hardship to the buyer, exclude the contract.
If a significant hardship or other obstacle to revoking or selling the contract is not evident, assume the pre-need funeral contract is revocable or salable. The individual is responsible for providing evidence to the contrary.
Single Purpose Pre-need Funeral Contracts
Use the burial space policy (591) for any single purpose burial space contract that is revocable or salable if:
The contract lists all of the burial spaces and either includes a value for each space or the total value of all the spaces combined, and
The burial spaces are paid for and being held for the individual’s future use.
Use the burial fund policy (592) for:
The portion of a single purpose burial space contract that implies it covers only burial spaces but does not identify some or all of the spaces, or does not include either a value for each burial space or the total value of all the spaces combined.
The amount paid on an installment contract for burial spaces if the contract does not entitle the person to the spaces until the full purchase price has been paid.
A single purpose revocable pre-need funeral contract that covers the cost of burial related expenses as defined in 592-2.
Fully Paid Pre-need funeral contracts for both burial spaces and burial expenses
For fully paid contracts, determine whether the contract designates the burial spaces or burial expenses as irrevocable.
If the contract designates only the burial space purchase as irrevocable, the burial fund portion is revocable and subject to policy in 592.
If the contract designates only the burial fund portion as irrevocable, the burial space portion is revocable and subject to policy in 591.
Consider the entire contract as an asset and apply the burial fund rules in 592 if:
the contract does not distinguished burial funds from burial spaces, and
you cannot decide which parts, if any, of the contract are irrevocable.
Installment contracts not paid in full for both burial spaces and burial expenses
Use the burial fund policy in 592 for the amount paid for any spaces and burial-related expenses if:
The contract does not entitle the individual to the spaces and services until the contract is paid in full, or
The contract relieves the seller of the obligation to provide the spaces and services at the price listed until the contract is paid in full.