When planning for the possibility of eventual nursing home admission, the key is not so much building up assets, but rather, spending as much as possible in ways that will not trigger penalties or ineligibility. So, some of the best tricks are finding exempt expenditures; these are things Medicaid allows you to spend money on without being considered part of your assets.
When it comes to the morbid topic of death, no one likes thinking about purchasing the last piece of property they will ever live on, but everyone does eventually die. Not thinking about it will not stop it from happening. Since we know death is inevitable, paying for that burial plot now will take that money out of the scope of Medicaid. There are also other alternatives that may qualify. Loved ones will have to shell out the money to bury you later anyway, so at least this money is now not going to the nursing home.
What can be included?
Now, there is a lot of misinformation on the Web about what Medicaid will exempt for funeral and burial expenses. To be clear, the burial plot is almost always permitted, as are the opening and closing charges and other incidentals that are required to be purchased along with the plot. However, many states will simply not allow you to include flowers, services, or $10,000 for a performance by your favorite local band, and so forth. Be reasonable, but if you have a lot of money to spend down, treat yourself.
Make it irrevocable
If you have the right to revoke the prepaid plot and receive a refund, then Medicaid will treat this as an asset you can liquidate to pay for your own nursing home care. Your burial contract should have a clause that makes it a final contract that cannot be revoked for any refund of money. That way, you technically have no immediate liquid value in the plot or the services relating to it. Instead, the only way you can enjoy the benefits of the contract – if one can call it enjoying – is to die first. For that reason, irrevocable burial contracts are exempt.
Buy a plot for family
Medicaid will also allow certain reasonable burial contract purchases for immediate family members, such as children and spouses. This rule is not absolute and such purchases are scrutinized closely. However, careful consultation with an elder law attorney is your best way to determine if this often overlooked planning tool could help you spend down your assets to qualify for Medicaid assistance if admitted to a nursing home.