As families prepare for the challenges of long-term care, few realize that one of the most effective strategies for protecting assets during Medicaid spend-down involves something as practical—and personal—as prepaying for funeral expenses.

In Connecticut, Medicaid imposes strict asset limits: individuals must have no more than $1,600 in countable resources to qualify. However, certain expenditures are exempt, and funeral contracts, when structured properly, are among the most strategic.

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The Role of Funeral Contracts in Medicaid Planning

Connecticut law allows residents to set aside money for funeral arrangements through two types of contracts: irrevocable funeral service contracts and revocable burial plot contracts. These tools allow individuals to prepay for their final arrangements in a way that both honors their wishes and shelters assets from Medicaid consideration.

1. Irrevocable Funeral Service Contracts

Under Connecticut General Statutes § 42-200(b), individuals may establish an irrevocable funeral contract of up to $10,000. These funds must be used for services—things that will happen in the future, such as embalming, transportation, and staffing for the funeral. Once created, these contracts cannot be canceled or refunded.

For Medicaid purposes, these funds are non-countable, making them a powerful tool for spend-down. However, because prepaying for “future services” is limited under Medicaid rules, this $10,000 cap is strictly enforced.

2. Revocable Burial Plot Contracts

To cover the tangible goods related to the funeral, such as the casket, burial vault, headstone, or urn, Connecticut permits the use of revocable burial contracts, which have no dollar limit.

The distinction here is crucial: these are not considered “future services,” but rather advance purchases of goods. Because these contracts can be canceled or refunded, they are revocable, but they are still considered non-countable for Medicaid purposes under Connecticut General Statutes § 17b-91(b).

Working with a knowledgeable elder law attorney and funeral home can—and should—help families establish both contracts in tandem: one irrevocable for services (capped at $10,000), and one revocable for goods (no cap), ensuring full coverage and compliance.

3. Disposition of Remains Documents

In addition to funding, it’s essential to legally designate who will carry out the deceased’s final wishes. Connecticut General Statutes § 45a-318 allows individuals to appoint a person responsible for the disposition of their remains.

Without this document, decisions about burial, cremation, or services can lead to conflict among family members—and, in some cases, probate litigation. Completing this form ensures that the pre-planned arrangements are honored without question.

Related Post: Why Planning a Funeral Is So Important

Why It Matters

Medicaid prohibits prepaying for most future services or expenses, but these funeral-related contracts are a narrow and vital exception. Pre-planning ensures that:

• Families are not burdened with unexpected costs during a time of grief.
• Individuals preserve dignity by making their wishes known in advance.
• Assets are legally sheltered from Medicaid’s spend-down requirements.

Final Thoughts

If you’re considering long-term care or want to help a loved one prepare, consult both an elder law attorney and a trusted funeral director. Used wisely, funeral contracts are not just about finances—they’re about peace of mind, honoring personal values, and ensuring Medicaid eligibility when it’s needed most.

For more information on Medicaid planning, irrevocable trusts, or advance directives, contact us today!