The Minnesota Department of Human Services implements policies regarding eligibility criteria for medical assistance (MA). Medical Assistance is the Minnesota-run Federal Medicaid program. Your county social workers and Elder Law attorneys have information about MA in general. This information will focus on the MA rules and limits for pre-funded funerals. Rules for other forms of public assistance such as SSI, General Assistance, and HUD are similar, but subtle differences exist. Please seek professional consultation.

Medical Assistance Pre-Funding Exemptions

The MA program has very specific rules regarding pre-funded funeral and cremations. Basically, there are 6 common funeral pre-funding options. You can view the detailed Medical Assistance rules and related definitions by clicking here. (The document is in Adobe Acrobat PDF format. If you do not have the viewer please click here.)

Below is a brief summary of each option. Please remember that each option receives very different treatment under MA guidelines. Pre-funding your funeral or cremation the wrong way may result in a substantial loss of account value upon application for Medical Assistance.

Preneed Life Insurance

There is no limit on preneed life insurance plans if they are properly structured with an irrevocable assignment and an itemized Statement of Funeral Goods and Services Selected from a licensed funeral establishment.

Irrevocable Funeral Bank Trusts

The allowable limit for irrevocable bank trusts is $2,000 for funeral home services AND the actual cost of burial space items. All interest on the services and burial space items is also exempt. You need an itemized Statement of Funeral Goods and Services Selected and an irrevocable funeral trust agreement from a licensed funeral establishment.

Revocable Funeral Bank Trusts

The allowable limit for irrevocable bank trusts is $1,500 for funeral home services AND the actual cost of burial space items. All interest on the services and burial space items is also exempt. You need an itemized Statement of Funeral Goods and Services Selected and an revocable funeral trust agreement from a licensed funeral establishment.

Personal Life Insurance or Annuities

Personal Life Insurance or Annuities that you may have on yourself or loved ones receives more strict treatment for MA purposes. Since there is no agreement between the insured and a funeral establishment to provide funeral or cremation services, MA caps the amount of insurance at $1,500 in face value or cash surrender value, depending upon your circumstances.

Personal Bank Accounts

Personal Bank Accounts such as Certificates of Deposits, savings accounts, and money market accounts also receive more strict treatment for MA purposes for the same reason as life insurance- because there is no agreement between the account holder and a funeral establishment. MA caps these accounts at $1,500. Interest on these accounts is also exempt until the $1,500 cap is reached.

Life Insurance Assignments

A life insurance assignment is created when you pledge an existing life insurance policy to a funeral establishment or into trust in exchange for the funeral establishment’s future services and merchandise. Assigning an existing life insurance policy effectively converts a policy into a preneed life insurance policy. There is no asset limitation for MA purposes as long as the agreement is properly structured with an irrevocable assignment and an itemized Statement of Funeral Goods and Services Selected from a licensed funeral establishment.

Please consult your funeral professional or visit an MFDA member firm or a Minnesota Funeral Plan® participant for more information.

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