Medicaid Policy
Medicaid Policy
No Previous Policy
When an individual irrevocably assigns ownership of a life insurance policy to the funeral provider to fund a pre-need funeral contract, the funeral provider has all the rights of ownership including the right to the cash value. Review the policy, the assignment form and the pre-need funeral contract.
1. Burial Spaces
Apply the burial space exclusion policy (591) to decide if you can exclude any burial spaces. The spaces and cost of spaces must be clearly shown in the contract. If the pre-need funeral contract cannot be revoked, the irrevocable assignment of ownership of the life insurance policy to the funeral provider gives the individual ownership of the burial spaces itemized in the contract. Any part of the contract that represents the purchase of a burial space does not reduce the burial funds exclusion.
2. Burial Funds
The face value of the burial funds portion of the contract reduces the $1500 maximum burial funds exclusion (592) because the contract is an irrevocable arrangement for the individual’s burial. The life insurance policy and the pre-need funeral contract are not countable resources owned by the individual because of the irrevocable assignment of the ownership of the policy.
3. Transfer of Assets
If the individual has irrevocably assigned ownership of life insurance to a funeral provider without receiving a pre-need funeral contract, the individual has not received fair market value for the policy. Likewise, if the value of the pre-need contract does not at least equal the cash value plus any dividend accumulations of the life insurance, then a transfer of assets has occurred. (See 575)