As we age and begin to look at our options for financial help, many of us will turn to Minnesota Medical Assistance (MA), MinnesotaCare or Supplemental Security Income (SSI). If you are just beginning to look into your options, first you must understand what each program is and whether you would qualify. Once you have a grasp on those questions, you can then take steps to figure out how to reduce your total assets to reach the income limit by setting aside monies to pay for your funeral.
Understanding the Programs
MA and MinnesotaCare are programs that are state subsidized and managed by the State of Minnesota. SSI is a federal program and is run by the Social Security Administration. Each program is administered by the county of residence and each has complicated eligibility requirements. For the purpose of this article, we will focus mostly on Minnesota Medical Assistance (MA).
Your first step is to figure out if you are eligible. You must meet these requirements to be eligible for MA:
- Be a Minnesota resident
- Be a U.S. citizen or a qualifying noncitizen
- Provide a Social Security number for each person requesting MA, unless an exception is met
- Meet the income limit and asset limit, if any
- Meet any other program rules
The most complicated step is seeing if you meet the income and asset limits. Here is the current income and asset guideline spreadsheet that is applicable until the end of 2017. If you think you meet all the eligibility requirements, you will need to apply through the Minnesota Department of Human Services. If you are a senior, you can find more about applying by clicking here to go to their website.
Pre-paying for Your Funeral to Help with Income Limits
Now that you have the information to decipher if you are eligible for MA, we can look at how pre-paying your funeral expenses can both lower your income to meet eligibility requirements and shelter those assets. MA and SSI have specific allowances when putting aside monies for future funeral expenses. These allowances depend on when the individual is applying for MA or SSI and the choice of the pre-funding option for the funeral expenses.
There are two pre-funding options with variations of both:
Option #1: A life insurance product;
Option #2: A bank trust. Depending on the application option and the choice of funding will determine how much money can be set aside for the funeral as a sheltered asset.
First, let’s define a sheltered asset. Currently, in the State of Minnesota in order to be eligible for Medical Assistance the applying individual’s total assets cannot exceed $3,000.00. However state law allows certain assets to be sheltered, or off-limits when determining MA eligibility. Some of those sheltered assets are:
- The homestead (real property or personal property used as a home), subject to an equity limit of $552,000 effective January 1, 2016 (see Appendix B for more details)
- A motor vehicle, regardless of value, if it is used for transportation of the recipient or a member of the recipient’s household
- Household goods and certain personal effects
- Prepaid burial spaces and burial space items
- Burial funds (up to $1,500 each for the recipient and the recipient’s spouse), prepaid funeral trusts ($2,000), and life insurance or annuity-funded burial arrangements under contract
In other words, when funeral expenses are paid in advance and placed in a state qualified account they become untouchable when the county officer is considering MA eligibility for the applicant. Burial space items include; casket, urn, burial vault, the opening of the grave, cremation niche, grave marker, and crematory fee.
Any monies placed into a pre-funded funeral account are irrevocably earmarked for the merchandise and professional services selected at the time of the pre-arrangement. These pre-funded funeral accounts are all interest bearing and the interest that accrues in these accounts is also considered as an excluded asset.
The one thing to remember about excluded assets in a funeral trust is that if monies are left over after the final funeral expense are paid that money will be claimed by the county of residence. The reasoning behind this is that the county has been supplementing the care of the individual and the estate of the individual should not profit at the State of Minnesota’s expense.
If you have further questions about pre-planning your funeral and the benefits, contact us today. We also recommend that you consult with your county social services’ office at the earliest time possible. For more information on medical Assistance in the State of Minnesota click on this link: Minnesota Department of Human Services.