Using a prepaid plan for Medicaid spend down

Larry Moore • May 17, 2024

Understanding Medicaid Spend Down & Pre-Planning for Funeral Costs

At Moore Funeral Home, we understand the emotional and financial complexities families face when a loved one requires long-term care. One significant challenge is ensuring eligibility for Medicaid, an important resource for many seniors. To qualify, families often need to "spend down" their assets.


In this blog post, we will explain what “spend down” means and highlight the importance of pre-planning funeral and other final expenses, with specific insights for residents of Georgia and Alabama. When it comes to preparing for the future, understanding the intricacies of Medicaid eligibility and the importance of pre-planning for funeral and burial expenses cannot be overstated. For families navigating the Medicaid process in Georgia and Alabama, the concept of “spend down” is particularly crucial.


Medicaid Spend Down: What Does It Mean?


Medicaid is a joint federal and state program that helps with medical costs for individuals with limited income and resources. To qualify, applicants must meet strict financial criteria, including asset limits. The process of reducing one’s assets to meet these criteria is known as "spend down."


Medicaid spend down refers to the process of reducing one’s assets to meet the financial eligibility requirements for Medicaid. This government program provides health coverage to millions of Americans, including eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities. However, to qualify, applicants must have income and assets below certain limits.


In Georgia, the Medicaid spend down process allows individuals to become eligible for Medicaid by spending excess assets on medical care and other approved expenses. Similarly, in Alabama, individuals can use the spend down method to lower their countable assets, making it possible to qualify for Medicaid assistance.


Why Pre-Plan Funeral and Burial Expenses?


Pre-planning funeral and other final expenses is not only a thoughtful way to reduce the burden on your loved ones during a difficult time but also a strategic step in the Medicaid spend down process. Funeral expenses are considered exempt assets under Medicaid rules, meaning that money set aside for these purposes does not count towards the Medicaid asset limit.


Pre-planning arrangement requires several choices, such as your preference for burial or cremation, the kind of ceremony you desire, and various other specifics. Once you’ve made your selections regarding the merchandise and services for your memorial or celebration, you have the option to secure a trust-funded pre-need funeral contract or an insurance plan to cover your funeral expenses.


**Please note that not all options are available in every state. Consult with one of our planning experts to determine the most suitable method to finance your arrangements. **


Pre-need insurance is a type of policy where you pay regular premiums, and the payout is designated to the funeral home to cover the products and services you’ve chosen when the time comes. A revocable trust safeguards the funds for your arrangements. You or your designated beneficiary have the authority to modify, revoke, or withdraw the trust funds at any point, following the terms of the contract and applicable state laws. Due to the possibility of withdrawing from a revocable trust, it typically does not meet the criteria for Medicaid spend down. Similar to a pre-need insurance policy, the funds in the trust are transferred directly to the funeral home upon your passing. Irrevocable trusts are also utilized to pay for funeral, cremation, and burial plot costs. These trusts are binding and cannot be cashed out, revoked, or liquidated. How much can be placed into an irrevocable trust for Medicaid spending varies by state. Please check with your attorney or local Medicaid office for the rules in your respective state.


Both Georgia and Alabama allow individuals to set aside money for funeral and burial expenses as part of the spend down. This can be done through pre-need funeral contracts, where services and merchandise are selected in advance, and the costs are locked in, protecting against future price increases.


Benefits of Pre-Planning with Moore Funeral Home


At Moore Funeral Home, we understand the emotional and financial stress that end-of-life planning can impose on families. We offer compassionate guidance and a range of pre-planning options to help you:


  • Secure your legacy: By allocating funds towards these inevitable costs, individuals not only ensure that their wishes are respected but also  relieve their loved ones from the financial burden during a time of grief.
  • Protect your assets: By pre-paying for your funeral and burial, you can reduce your countable assets while preserving them, potentially speeding up the Medicaid eligibility process.
  • Gain peace of mind: Knowing that everything is taken care of can provide immense relief for you and your loved ones.


Navigating State Requirements


Each state has specific rules regarding the spend down process and pre-planning for funeral expenses. Georgia and Alabama have provisions to designate funds for funeral expenses as well as other related items as exempt assets.


For more information about Medicaid eligibility in Georgia, please visit this link: Georgia Medicaid Eligibility: 2024 Income & Asset Limits (medicaidplanningassistance.org)


Dade County Office

Address: 71 Case Avenue, Trenton, GA 30752 | Phone: (706) 657-7511


Walker County Office

Address: 10056 North Highway 27, Rock Spring, GA 30739 | Phone: (706) 375-0726


Contact & location information for all counties in Georgia can be found here. Find a Location (georgia.gov)


For more information about Medicaid eligibility in Alabama, please visit this link: Alabama Medicaid Eligibility: 2024 Income & Asset Limits (medicaidplanningassistance.org)


Jackson County Office

Address: 6515 University Drive, NW (Suite B), Huntsville, AL 35806-1775 | Phone: (855) 733-3160


Dekalb County Office

Address: 200 West Meighan Blvd. (Suite D), Gadsden, AL 35901-3200 | Phone: (866) 371-4077


Contact & location information for all counties in Alabama can be found here. Alabama Medicaid



The American Council on Aging has created a useful tool to help you determine Medicaid eligibility, you can find that tool here. Seniors: Check Your Medicaid Eligibility for Long-Term Care (medicaidplanningassistance.org)


Conclusion


Understanding Medicaid spend down and pre-planning for funeral costs are essential steps in securing your future and easing the burden on your family. For personalized assistance and to explore your options, contact us today to learn more about how we can assist you in pre-planning and ensuring a smooth path to Medicaid eligibility.


Pre-planning both funeral and burial expenses is a wise and compassionate step that aligns with Medicaid’s spend down requirements. At Moore Funeral Home, we are here to help families we serve in Georgia and Alabama navigate this process with respect, care, and dignity. Contact us today to learn more about how we can assist you in preplanning and ensuring a smooth path to Medicaid eligibility.


For more detailed information on Medicaid spend down requirements and preplanning for funeral expenses in Georgia and Alabama, please reach out to your local Medicaid office or a qualified attorney specializing in elder law.


The content of this blog is intended for broad informational purposes and should not be interpreted as specific legal counsel. For advice pertaining to legal matters, please engage the services of a qualified attorney.


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