Does Medicaid Cover Cremation Costs?

Updated

Medicaid is a source of health coverage for millions of people across America. Despite its popularity, it’s still very confusing what Medicaid does or doesn’t cover. Primarily for elderly adults, those who are low-income, or dependent children, Medicaid is a great source of security. Still, it doesn’t cover everything, especially when it comes to final expenses. 

Jump ahead to these sections:

One of the most common questions is whether or not Medicaid covers cremation costs. The cost of a funeral or final expenses can be expensive, costing families upwards of $1,000+. With rising costs like these, it’s not surprising more families are looking for ways to make ends meet when saying goodbye to loved ones. 

While there are some Medicaid funeral assistance benefits, it’s important to understand exactly what’s covered. In this guide, we’ll share the details on what you can expect Medicaid to pay for after a loss. In other words, does Medicaid cover cremation costs or burial costs? Let’s find out.

Will Medicaid Cover Cremation?

First, it’s always important to notify Medicaid of a death. This ensures you have access to the most benefits as possible quickly. However, Medicaid doesn’t cover the cost of cremation or burial specifically. Because funeral expenses aren’t considered medical expenses (since they happen after death), they aren’t covered under any of the branches of Medicare. 

Still, if your loved one has Medicare Advantage coverage, they might have some assistance available. While rules vary by state, Medicare Advantage is more flexible than the other types of Medicaid. Under a Medicare Medical Savings Account (MSA), money is set aside into a healthcare savings account under Medicare Advantage. 

After death, any funds left in an MSA are considered part of the estate. That means it can usually be used to pay for funeral expenses, including cremation. Many people who have Medicare qualify for a Medicare Savings Account, and this is a great alternative to final expense insurance or life insurance. 

Does Medicare cover funeral costs in some states?

Medicare is largely based on your location. It’s managed by individual state governments, so some states have their own regulations when it comes to funeral expenses. In some states, funeral assistance is included under Medicaid.

For example, in Colorado, Medicaid beneficiaries can access up to $1,500 in funeral assistance. This is true in a handful of other states as well, but the amount available varies. Even if you’re not in a state that offers Medicaid coverage for final expenses, there might be other ways to find funds. 

How to Earmark Funds to Cover a Future Cremation

Since Medicaid doesn’t cover the cost of a future cremation on its own, it’s important to be proactive with your planning. The more you think ahead, the less likely this burden falls onto your surviving family members. One option is called an Irrevocable Funeral Trust (IFT). Here are the steps to take if you decide an IFT is right for you.

Step 1: Understand how IFTs work

First, you need to understand what an IFT is. This is an Irrevocable Funeral Trust. It’s a type of legal agreement where someone sets aside money for a specific purpose or person. As the name of this implies, these funds are for a funeral or final expenses. Because the money can’t be returned once set in the trust, it’s “irrevocable.” 

By putting this money aside in advance, many people who are on the border of qualification are able to qualify for Medicaid. Because it’s in a secure, irrevocable trust, these funds don’t count as assets. This allows families to pre-pay the cost of a funeral without worrying about Medicaid restrictions.

Step 2: Calculate your unique funeral costs

Before you can create an IFT, you need to create an estimate for your funeral. Many states set limits to these trusts, and they can’t usually exceed $15,000. Consider the type of funeral you’d like, as well as the cost of cremation near you. 

It’s important to not overfund your IFT. These funds can’t be reclaimed later on, so they need to be used in full or lost forever. Some states require a funeral director to justify the costs in line with traditional funeral expenses, so keep that in mind. 

Step 3: Complete the paperwork

Lastly, complete the IFT paperwork. You must do this before you apply for Medicaid. You might wish to create an IFT through an estate attorney or other professional who can guide you through the next steps. Like with any legal process, consider the long-term financial implication. From there, apply for Medicaid for health coverage in your state. 

Tips on Getting a Low-Cost or Free Cremation

Lastly, let’s consider some of the many ways to get a low-cost or free cremation. While Medicare isn’t usually much help with final expenses, there are still many ways to keep your overall costs low. Unlike burial, cremation is a flexible choice. 

Choose a direct cremation

While a traditional cremation can cost upwards of $1,500, this isn’t the case for a direct cremation. With a direct cremation, the cremation happens quickly after death. This cuts down on preservation costs and add-ons, greatly reducing the overall price of the cremation. A direct cremation runs anywhere from $500 to $1,000 depending on your state. 

If you don’t need to have the body present at the physical funeral, a direct cremation is a low-cost option. With more people choosing cremation than ever before, it’s easier to find a direct cremation provider near you. These final sendoffs might be faster, but they’re just as meaningful. 

Donate your body to science

Alternatively, a whole-body donation to science is an effective way to get a cremation for free. With a whole-body donation, your body goes toward a medical institution or research facility. It’s used to aid medical treatment, training, and education. 

Not only does your body go toward making the world a better place, but it also reduces the burden for your family. Once your body is no longer needed, you receive a cremation free of charge. The ashes are then returned to the family. 

Purchase final expense insurance

Next, another option to pay for a cremation in advance is through final expense insurance. This is a type of life insurance that’s used specifically to cover any costs associated with final expenses, like cremation or burial. While this requires pre-planning, it can be very helpful. However, Medicaid does consider final expense insurance a type of asset. 

Apply for the death benefit

The death benefit is another government option through the Social Security Administration. A qualifying loved one can apply for a lump-sum benefit of several hundred dollars if the deceased was a Social Security recipient. This might not be much, but it can go toward purchasing an urn, direct cremation, or other final expenses. 

Contact your local charities or organizations

If you’re in need of assistance paying for a cremation, it’s a good idea to contact local charity groups and organizations. Since regulations vary by state and city, you might have more success working with a charity directly. Many organizations understand the burden final expenses place on families, and they make it possible for public funds to cover these costs for those in need. 

Seek veteran benefits

If you or your loved one was a veteran, he or she might qualify for veteran benefits. There are burial and cremation benefits, and your loved one can also be buried in a national cemetery if he or she qualifies. This sometimes also applies to surviving beneficiaries, like spouses or children. If you think you qualify, contact your local VA office for assistance. 

Purchase an urn online

Last but not least, purchase an urn online. While your funeral home or crematorium likely has its own selection of urns available, these can be costly. In addition, they might not have enough styles that match your needs. You can always purchase an urn on your own online, and this can result in huge savings. 

Not only do you have a greater selection online, but you have more flexibility in cost. Remember, you don’t need an urn at all. You could choose to scatter a loved one’s ashes, bury them, or create your own urn. This is an opportunity to be creative. 

Creating an End-of-Life Plan with Medicaid

Though Medicaid is a source of relief for many recipients and their families, it’s not an umbrella solution. Unfortunately, many costs associated with end-of-life like final expenses aren’t covered under most types of Medicaid. While some Medicaid Advantage plans leave a bit of flexibility, it’s still important to make sure you’re covered for anything that lies ahead. 

The best way to be prepared for your end-of-life is to start now. Begin having these conversations, no matter how difficult, with loved ones. Talk about your wishes, your budget, and your current insurance coverage. The more proactive you are, the less likely this burden falls to your loved ones in the future. Not sure where to begin? Create a free end-of-life plan to share with loved ones today.

Categories:

Icons sourced from FlatIcon.