Haris Ashley
Medicaid is a federal- and state-funded health insurance program for people with low incomes or critical medical needs. It covers over 86 million Americans, including seniors, disabled individuals, children, parents, and pregnant women. While Medicaid does not prevent beneficiaries from having life insurance, certain types of life insurance policies that accrue cash value may interfere with Medicaid's asset limits, potentially impacting eligibility. This is because cash value is considered an asset by Medicaid. Burial insurance, a type of whole life insurance, accrues cash value and could therefore be counted as an asset, though this varies by state. To avoid issues with eligibility, it is recommended that beneficiaries name someone else as the policy owner so that they own the cash value.
| Characteristics | Values |
|---|---|
| Can Medicaid stop helping because of too much burial insurance? | No, but burial insurance policies accrue cash value, which Medicaid considers an asset and can conflict with their requirements. |
| What is the limit on cash value? | $2,000 in most states. |
| What are the other ways to avoid conflict with Medicaid eligibility? | Name someone else as the policy owner so they own the cash value rather than the beneficiary. |
| Which states offer Medicaid funeral assistance? | Colorado, Indiana, Wisconsin, and Wyoming. |
| How to apply for Medicaid funeral assistance? | Visit your state’s website and find the burial assistance program page to confirm eligibility. |
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What You'll Learn
- Burial insurance is allowed on Medicaid, but it must be structured correctly to avoid conflict with eligibility
- Burial insurance accrues cash value, which is considered an asset by Medicaid and can impact eligibility
- Only four US states offer burial assistance as part of Medicaid coverage
- Medicaid has an asset limit, which varies by state
- Irrevocable burial contracts and burial space items are exempt from being counted as assets for Medicaid
Burial insurance is allowed on Medicaid, but it must be structured correctly to avoid conflict with eligibility
Medicaid is a federal assistance program that is managed by individual states, so benefits differ across the US. Only four states—Colorado, Indiana, Wisconsin, and Wyoming—offer burial or funeral assistance as part of Medicaid coverage, and amounts and eligibility vary. Most states provide some financial help for individuals who cannot afford a funeral, but this is often very minimal and usually covers a basic cremation without viewing or other funeral services.
Funerals and direct burials are expensive, with costs averaging $9,995 and $2,597 respectively in 2023. This can cause financial hardship for many families, so it's important to know what options are available. Burial insurance, also called final expense insurance or funeral insurance, is a type of whole life insurance policy that covers burial or cremation costs and funeral arrangements.
Medicaid allows anyone to own burial insurance, but it is important to structure the policy correctly to avoid conflict with Medicaid eligibility. Burial insurance plans are a type of whole life insurance, which means they will build cash value over time. Medicaid considers cash value an asset, which can potentially cause an issue with eligibility. The best thing to do is to name someone else as the policy owner so that they own the cash value rather than the insured person. In that case, the cash value in a burial policy will not be counted as one of the insured person's assets. If you are on Medicaid and have any type of life insurance that builds cash value, it's important to ensure that it does not exceed the $2,000 limit that most states have.
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Burial insurance accrues cash value, which is considered an asset by Medicaid and can impact eligibility
Medicaid is a federal assistance program that is managed by individual states, so benefits differ across the US. Only four states offer burial assistance as part of Medicaid coverage, and amounts and eligibility vary. These states are Colorado, Indiana, Wisconsin, and Wyoming. Most states provide some, albeit very minimal, financial help for needy individuals who cannot afford a funeral.
Burial insurance is a type of whole life insurance policy that covers burial or cremation costs as well as funeral arrangements. It is also known as 'final expense insurance' or 'funeral insurance'. It is important to note that burial insurance plans accrue cash value over time. This cash value is considered an asset by Medicaid and can impact eligibility. While burial insurance does not directly impact Medicaid eligibility, the cash value it builds up can potentially cause issues with Medicaid's asset limit.
Medicaid has an asset limit, which varies by state. For example, for single applicants in 2025, the asset limits in New York, Illinois, New Hampshire, and Connecticut were $32,396, $17,500, $2,500, and $1,600, respectively. Generally, most states have an asset limit of $2,000, with California being the only state without an asset limit.
If the cash value of a burial insurance policy exceeds the asset limit, it can result in Medicaid ineligibility. To avoid this, it is recommended to name someone else as the policy owner so that they own the cash value. By doing so, the cash value will not be counted as one of your assets, even though you are the one covered by the insurance. Additionally, when purchasing burial insurance while on Medicaid, it is vital to structure the policy correctly to avoid conflict with Medicaid eligibility.
It is important to be mindful of the specific rules and regulations in your state regarding burial insurance and Medicaid eligibility. Consulting with a professional Medicaid planner or an experienced insurance agent can help ensure that your insurance policy does not interfere with your Medicaid eligibility.
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Only four US states offer burial assistance as part of Medicaid coverage
Medicaid is a federal assistance program managed by individual states, so benefits differ across the country. Only four US states—Colorado, Indiana, Wisconsin, and Wyoming—offer burial assistance as part of Medicaid coverage. The amount of assistance and eligibility criteria vary among these states. For instance, Colorado provides up to $1,500 toward the cost of a funeral, provided that the total cost of the services does not exceed $2,500 and all other Medicaid eligibility requirements are met.
While most state Medicaid programs do not cover funeral costs, some do provide assistance for burials and funerals. It is important to note that state Medicaid programs generally exclude burial funds and burial spaces from countable resources used to determine Medicaid eligibility. This means that a funeral plot or memorial will not be counted as a financial asset and will not affect eligibility. Additionally, some states may offer funeral assistance outside of their official Medicaid coverage.
The way each state handles life insurance policies and Medicaid eligibility can be complex. Burial insurance, also known as final expense insurance or funeral insurance, is a type of whole life insurance policy that accrues cash value. This cash value is considered an asset by Medicaid and can impact eligibility if it exceeds the $2,000 limit that most states have. To avoid any issues, it is recommended to name someone else as the policy owner so that they own the cash value instead of the insured individual.
It is always advisable to consult with a professional Medicaid planner or an experienced insurance agent to ensure that any life insurance policies or burial plans do not interfere with Medicaid eligibility.
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Medicaid has an asset limit, which varies by state
Medicaid is a federal assistance program that is managed by individual states, so benefits differ across the country. It has an asset limit, which varies by state, and typically only applies to seniors and disabled people. For instance, in 2025, the asset limits for single applicants in New York, Illinois, New Hampshire, and Connecticut were $32,396, $17,500, $2,500, and $1,600, respectively. Generally, most states have an asset limit of $2,000, with California being the only state without an asset limit.
The asset limits for married couples are more complicated and vary by state, Medicaid program, and whether one or both spouses are applying for Medicaid. Couples have increased asset limits since all countable assets owned by either party are considered for eligibility. Seniors and disabled people enrolled in regular Medicaid typically have an asset limit of $2,000 as an individual and $3,000 as a couple, though it varies by state.
It is important to note that each state administers its own unique mix of Medicaid programs and sets its own financial and medical eligibility requirements within federal parameters. Some states have rules about a Medicaid applicant having both a burial account and a life insurance policy. For example, Illinois allows up to $1,500 in cash value for a life insurance policy or a prepaid cancellable burial plan. Georgia allows Medicaid applicants to have up to $10,000 set aside in a burial account.
The way each state handles life insurance policies and Medicaid eligibility can be complex, so it is recommended to seek professional advice. While Medicaid allows anyone to own burial insurance, it considers cash value an asset, which can potentially cause an issue with Medicaid eligibility. This is because burial insurance plans are a type of whole life insurance that accrues cash value. If you're on Medicaid and have any type of life insurance that builds cash value, it's important to ensure it doesn't exceed the $2,000 limit that most states have.
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Irrevocable burial contracts and burial space items are exempt from being counted as assets for Medicaid
Medicaid is a federal assistance program managed by individual states, so benefits differ across the country. Only four states offer burial assistance as part of Medicaid coverage, and amounts and eligibility vary. These are Colorado, Indiana, Wisconsin, and Wyoming.
To be considered exempt, burial funds can only be purchased for the Medicaid applicant and their spouse. Burial funds must be placed in an irrevocable prepaid funeral contract (maximum value determined by the state) or a revocable account of less than $1,500. An irrevocable contract allows more burial funds to be set aside and protects your assets so that those funds are not lost to nursing home care and can be used for funeral and burial expenses.
Irrevocable burial contracts and burial space items are one of the few ways to legally set aside some of your assets for your children. They are also an invaluable Medicaid planning tool, allowing applicants to lower their countable assets and meet Medicaid's asset limit for qualification purposes.
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Frequently asked questions
Yes, you can have burial insurance on Medicaid, but it is important to structure the policy correctly to avoid conflict with Medicaid eligibility. Burial insurance is a type of whole life insurance policy, which accrues cash value over time. Since Medicaid considers cash value an asset, it is important to ensure that the value of your burial insurance policy does not exceed the limit set by your state, which is typically $2,000.
To avoid conflict with Medicaid eligibility, you can name someone else as the policy owner, such as a child or spouse, so that they own the cash value of the policy. This way, the cash value will not be counted as one of your assets, even though you are the one covered by the insurance. Additionally, make sure to check your state-specific rules and limits regarding burial insurance and Medicaid eligibility.
If your burial insurance policy exceeds the Medicaid asset limit, it could potentially impact your Medicaid eligibility. In this case, Medicaid may request information or changes to your policy to comply with their asset limitations. It is important to provide them with the current cash value figures of your policy and make any necessary adjustments to ensure compliance with Medicaid's rules.
Medicaid is a federal-state partnership program, and as such, the availability of burial or funeral assistance varies by state. Only four states—Colorado, Indiana, Wisconsin, and Wyoming—offer Medicaid funeral assistance, and the benefits and eligibility criteria differ across these states. Most states, however, provide some minimal financial assistance for individuals who cannot afford a funeral, and many states pay benefits directly to the funeral service provider.
