Budgeting for End of Life Costs

[PrincessTDQ]

Under Federal law, a funeral expense policy is one of the few things that a Medicaid patient can use assets to pay for that the state cannot recover; whoever handled processing her Medicaid application should have advised you to purchase one before her remaining assets were signed over to the nursing home. I don't know if you can get the money for it back from them now, but you could try, though I wouldn't hold out much hope. In addition, some states do allow a certain amount of the estate value to be used for funeral expenses before the clawback kicks in, it looks like Texas is one of them, though I don't see mention of the allowed amount (most of the time it is no more than $2K; the average US funeral costs ~$8K): http://www.dads.state.tx.us/services/estate_recovery/faqs.html

Policies are normally sold by funeral homes and mortuary associations, and online by brokers. In Medicaid situations, the policy must be nonrevokable to qualify; once the money is paid you cannot cancel the policy for a refund.

Thank you!

 

[riley2008]

Background info, my mother is 80 in a nursing home with congestive heart failure and stage four renal failure. Now, she's had both of these conditions for about 7 years. She's been in the nursing home for 6 months following a stroke. Obviously she could go any minute or live another 10 years. Her mother was 90 when she died, and her dad was in his 80s when he died. She's also currently on medicaid so her insurance policies will go to pay back medicaid when she dies. We're in Texas and that's the law.

I'm thinking I should take out a policy on her to help with funeral expenses. Any suggestions on where to get funeral insurance?

Just an FYI - her insurance policies shouldn't go back to Medicaid, as they are not part of probate if they have designated eligible beneficiary. Medicaid goes after real and personal property.

From http://www.dads.state.tx.us/services/estate_recovery/faqs.html

What is considered an estate?
An estate for purposes of Medicaid estate recovery consists of the deceased Medicaid recipient's real and personal property that are subject to probate. Real property may include a home and other real estate. Personal property may include a car, cash and other personal property. A probate estate does not include assets that pass directly to a beneficiary independently of the probate process. Some typical examples of assets that usually are not subject to probate include:

•insurance policy proceeds;
•retirement accounts, such as IRAs;
•pension plans;
•accounts at financial institutions, such as banks or credit unions, that are paid on death or accounts or joint accounts with right of survivorship;
•mutual funds; or
•deferred compensation plans.​

Hope that helps. My mother went through this with my grandmother a few years back. They will go after the house, cars, etc. They didn't go after the insurance policies, the retirement accounts nor a health savings account, just the house and contents. (Mother and Uncle were already in the process of selling the house anyway and contents had been sold/trashed, so it was somewhat a simple process ableit painful - sell the house and send the money. Two years later there was some sort of audit or reculation and they returned a check for a couple of thousand dollars. Not sure what that was all about though.)