Medical Assistance for People Who Are Age 65 or Older and People Who Are Blind or Have a Disability

2.3.3.2.7.11.2 Burial Fund Exclusion (Archive)

Up to $1,500 of liquid assets set aside for a person's burial expenses is excluded. The $1,500 burial fund exclusion is reduced when a person owns certain other assets.

Burial Funds

Burial funds may be:

• revocable burial contracts;

• revocable burial trusts;

• other revocable burial arrangements (including the value of certain installment sales contracts for burial spaces);

• cash;

• financial accounts (e.g., savings or checking accounts); or

• other financial instruments with a definite cash value (e.g. stocks, bonds, certificate of deposit, etc.)

• cash surrender value of a non-excluded life insurance policy

These funds must be clearly designated for the person or the person's spouse's burial, cremation or other burial-related expenses. Property other than that listed in this definition is not considered burial funds and cannot be excluded under the burial funds provision. For example, a car, real property, and livestock, are not burial funds.

Expenses for Burial Fund Exclusion Purposes

Expenses included for burial fund exclusion purposes are generally those related to preparing a body for burial and any services prior to burial. They may include, for example: transportation of the body, embalming, cremation, flowers, clothing, and services of the funeral director and staff. Expenses may also be associated with cultural customs, other than burial, when a person dies such as scattering of ashes.

Usually, expenses for items used for interment of the deceased's remains are not included for burial fund exclusion purposes. Such items may be subject to the burial space exclusion (See MA-ABD Burial Space Exclusion). However, items that do not qualify for the burial space exclusion, for example, a space being purchased by installment contract, may be excluded under the burial fund exclusion.

Originally Designated Amount

The originally designated amount of a burial fund is the amount set aside for burial, including excluded and non-excluded funds, but exclusive of interest and appreciation, at the time of the most recent designation. Any amount can be designated for burial, but excluded only up to a certain amount.

Increases in Value of Burial Funds

Any appreciation in the value of excluded burial funds is an excluded (and excluded income) as long as the appreciation is left to accumulate in the fund, even if the total burial fund exclusion exceeds $1,500 due to appreciation in value.

Increases in Maximum Exclusion of Burial Funds

Once the amount of designated burial funds equals $1,500, the only additions to that amount that can be excluded under the burial fund exclusion are appreciation and/or interest.

Until $1,500 (or the remaining amount available to be excluded) in burial funds has been designated, additional amounts can be excluded under the burial fund exclusion if the person designates them for burial expenses. Interest on excluded burial funds is not included in determining if the $1,500 maximum has been reached.

A person's designated burial fund remains in effect until:

• MA eligibility terminates; or

• the person uses the funds for another purpose

A person may designate additional funds, up to $1,500, as their burial fund when assets originally designated as the burial fund are no longer excluded under the burial fund exclusion.

Amount of Funds That Can Be Excluded

Up to $1,500 of liquid assets set aside for a person's burial expenses is excluded. The $1,500 burial fund exclusion is reduced when a person owns certain other assets.

Maximum Exclusion

The maximum amount that can be excluded is $1,500 set aside for:

• the burial expenses of the person;

• the burial expenses of the person's spouse. The spouse does not have to be eligible for MA and,

• the burial expenses of the persons dependent children who are MHCP enrollees and live with the person or the person's spouse

This exclusion is separate from, and in addition to, the burial space exclusion. However, the $1,500 burial fund exclusion may also include the value of funds paid on installment contracts for burial spaces that do not qualify for the burial space exclusion because they have not yet been paid for in full.

Other Assets and the Maximum Exclusion

These burial service arrangements apply to the maximum $1,500 exclusion to the extent that they do not represent excluded burial spaces:

• the face value (FV) of any life insurance policy on the person (or spouse, if applicable), if such policy is excluded under the life insurance exclusion (See MA-ABD Life Insurance); and

• any amount held in an irrevocable trust, burial contract, or other irrevocable arrangement for the person ( or the person's spouse) burial expenses unless it is excluded under the burial space exclusion.

• the face value of burial insurance

Subsequent Purchase of Excluded Life Insurance or Irrevocable Burial Contract

A subsequent purchase of an excluded life insurance policy or an irrevocable burial contract reduces the amount of the available burial fund exclusion as described above. The reduction is effective the month after the month in which the life insurance or the irrevocable burial contract was purchased. This may also change which funds are excluded.

Example:

Jacob has the following burial assets:

$1,000	designated savings account
$200	irrevocable burial contract
$1,500	maximum exclusion
-200	irrevocable burial contract
$1,300	available exclusion
-1,000	designated savings account
$300	still available for exclusion

 

The designated $1,000 savings account is excluded under the burial fund exclusion. Two years later, Jacob wants to add to his designated burial savings account which now has a balance of $1,150 due to accumulated interest. He can increase the excluded funds in the account by up to $300 which would bring the total designated burial funds up to $1,300 (1,500-200) plus interest.

The amount of interest which accumulated in the account was not counted.

Modifications are Permitted

Change of Form

Transferring excluded burial funds from one form to another (for example, from a certificate of deposit to a burial contract) is allowed.

Loans Against Burial Funds

A loan against the cash surrender value (CSV) of a life insurance policy that has been excluded under the burial fund exclusion is allowed if the loan is for the purchase of another burial fund.

Use of a burial fund as collateral for a loan is not allowed because the loan creates an encumbrance on the funds. Since the funds are not available for the individual's burial as long as they are encumbered, the funds cannot be considered set aside for the individual's burial. This is true even if the loan is used for burial purposes.

Burial Funds Must Be Kept Separate

Burial funds may be commingled with other burial expense-related assets. but must be kept separate from non-burial related assets to be excluded. Burial-related assets are burial funds (excluded and non-excluded) and burial spaces (including agreements representing the purchase of a burial space). If burial funds are commingled with non-burial related assets, the exclusion does not apply.

Examples

A single burial contract for $2,500 of burial services and $2,000 in burial spaces does not have to be separated into 2 contracts since the whole amount is burial-related, even though only $1,500 of the contract as a burial fund is excluded.

A bank account containing $1,200, $500 of which is designated for burial and $700 of which is other funds the individual uses for living expenses, is not allowable and the $500 may not be excluded as a burial fund.

Re-designation

The burial fund exclusion may change when a person obtains additional assets for burial expenses of the amount or nature of the existing assets designated as the burial fund occur. A re-designation is a change or correction of a previous burial fund designation made necessary by a change in the amount of burial funds originally designated (not including accumulated interest or appreciation). This may be caused by addition of funds (other than interest) or use of funds. The burial fund exclusion is not lost and reapplied, but merely corrected.

Deeming Considerations

The burial fund exclusion also applies to assets owned by the person's spouse that are designated as set aside for the burial expenses of the person or their spouse or eligible dependent children.

Legal Citations

United States Code, Title 42, section 1382b

Code of Federal Regulations, Title 20, section 416.1231

Minnesota Statues, section 256B.056, subdivision 1a

Minnesota Statues, section 256B.056, subdivision 3d

Published: August 7, 2019

Archived: June 1,2020