Guidelines and funding for pre-arrangements

submitted by Jason “Oz” Oszczakiewicz, Owner/Supervisor, Varcoe-Thomas Funeral Home of Doylestown, Inc.

Today, many families make difficult decisions when a parent or loved one requires continuous care and must be placed in an assisted living or nursing home facility.

When parents or loved ones do not have enough assets to pay for private care they must exhaust their assets and go on to Medicaid assistance.  This means the county in which the person resides determines how much personal assets must be used before being approved for Medicaid.  Social workers and facilities instruct families to open trust accounts in banks to pre-fund the funeral so the personal assets of the patient are sheltered and are made irrevocable.

Irrevocable assets can be used only for the funeral or cremation expenses and cannot be refunded back to the family.

Each county in Pennsylvania determines the maximum amount that can be funded and Bucks County allows up to $14,000 toward a recipient’s funeral.

I caution families to select a funeral home and meet with a funeral professional to determine the cost of a funeral or cremation service.  There are several different types of funding accounts, such as: a trust fund in a bank or financial institution, a death related insurance policy or a death related annuity product.

The advantage of an insurance or annuity product is that the interest grows from the time the policy is funded until the date of death. The interest is also tax-free and a beneficiary may be designated unlike a trust fund.

The interest rate is usually higher and if a person is not going on Medicaid assistance payments may be flexible over three, four, seven, or 10 years. Also, if a recipient passes after half of the policy is paid it acts as a traditional policy and the difference toward the original funeral price is paid up.