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Senior Citizen's Guide to South Jersey

Prepaid Funeral Arrangements and Medicaid Eligibility

Are you considering prepaying your funeral or the funeral of a loved one?  Medicaid will cover the cost of a very basic funeral for Medicaid recipients; however, many prefer a more desirable funeral that would exceed the cost that Medicaid will cover.  It is for this reason that Medicaid eligibility experts often recommend creating an irrevocable burial/funeral trust prior to obtaining Medicaid. The good news is that Medicaid recognizes this as a legitimate spend-down.

In preparation for this article, I wanted to hear some practical advice from someone with hands-on experience in this field. I phoned Mr. Terry Lamplugh, a licensed insurance agent specializing in final expense matters.  Mr. Lamplugh comes with over 27 years of experience in this field.  He was very insightful, and the information he provided was extremely valuable. Below, I have outlined some of the topics we discussed.

Prepaid Funeral- Medicaid Spend-down
When an individual is applying for Medicaid and has assets that exceed Medicaid’s resource limit, a Medicaid spend-down is necessary. Medicaid will only allow an applicant to keep minimal assets. Assets in excess of the allowable amount must be spent down in order to achieve financial eligibility. Putting money in an irrevocable funeral/burial trust is an exception to the spend-down rule! Prepaying a funeral is a viable option to preserve money.  In the event that there is a spouse, both spouses may prepay their funerals so that each spouse is covered using the spend-down funds.

Irrevocable Trust Funds
A family may establish an irrevocable funeral trust fund. An irrevocable trust fund is an agreement in which funds are set aside for a later time or purpose and cannot be used until that predetermined time.  In this case, it would be funds set aside for a funeral that may not be touched or disbursed until the time of death.   Such a trust can be arranged by a funeral professional or a final expense planner. The professional will commonly direct the funds into an insurance plan that provides portability all over the country to any funeral home.  This means that regardless of who creates the financial instrument, the prepaid funeral trust can be utilized in any funeral home. The advantage of this arrangement is that the consumer can purchase the funeral in a competitive marketplace and utilize the services in their local funeral home. Once money for a funeral has been put in an irrevocable trust fund, it is no longer considered a spend-down asset according to NJ Medicaid Guidelines.

Funeral Costs
The average traditional funeral in NJ can cost you anywhere between $9,000-$12,000, depending on the selection of merchandise, such as the casket and cement vault. Cemetery lots range from about $1500 to $10,000. Plot costs vary based on location as well as other factors including religious affiliation of the cemetery, etc.

Veteran’s Burial

In the State of New Jersey, all honorably discharged veterans receive two free burial plots at any National Veterans Cemetery.  This benefit includes the opening and closing of the graves, the marker,and the cement vault. A well known veteran’s cemetery is Brigadier General William C. Doyle Memorial Cemetery at Arneytown, NJ.

There is an old expression that says, “We don’t plan to fail, we fail to plan.” Pre-planning and pre-paying for a funeral may not seem like a pleasant task. Taking care of it in advance will save you from heartache in the future as well as simultaneously serve as a tool for asset preservation.

For questions or more information about the Medicaid spend-down and Medicaid application process, reach out to Senior Planning Services at 855.S.Planning (775.2664) or


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