Medicaid Planning and Prepaid Funeral Arrangements — Protecting Assets While Securing Your Wishes

If you or a loved one may need long‑term care, Medicaid can be a lifeline — but qualifying often means spending down assets to meet strict limits. One of the few ways to set aside funds without affecting eligibility is through a properly structured prepaid funeral or cremation plan.

This guide explains how prepaid arrangements work in Medicaid planning, the rules in Florida, and how to make sure your plan is safe, compliant, and maximizes your protection.

🏛️ Medicaid’s Asset Rules — The Basics

Medicaid is a needs‑based program. In most states, including Florida, you must have very limited countable assets to qualify for long‑term care coverage.

Countable assets include:

• Cash, savings, and checking accounts
• Investments (stocks, bonds, mutual funds)
• Certain real estate other than your primary residence

Exempt assets (not counted toward the limit) include:

• Your primary home (up to a certain equity value)
• One vehicle
• Personal belongings
• Irrevocable prepaid funeral or cremation arrangements

⚖️ Why Prepaid Funeral Plans Are Exempt

Medicaid allows you to set aside funds for your funeral or cremation if:

• The plan is irrevocable (cannot be canceled for a refund)
• The funds are used only for funeral, cremation, or burial expenses
• The plan is properly documented and complies with state law

In Florida, irrevocable preneed contracts that meet these requirements are not counted as assets for Medicaid eligibility purposes.

💵 Maximum Amount Allowed in an Irrevocable Contract

As of 2025, Florida Medicaid allows an individual to place up to $15,000 into an irrevocable funeral or cremation contract for themselves without it counting toward the Medicaid asset limit.

This amount is per person, meaning a married couple could each have their own irrevocable contract funded up to the maximum. The funds can cover services, merchandise, and related burial or cremation expenses, but must be structured so they cannot be refunded or used for anything else.

🔄 Portability and Medicaid

If you move to another state after setting up a Florida preneed plan:

• Life‑insurance‑funded plans are generally portable nationwide.
• Trust‑funded plans may be harder to transfer and could involve fees.
• Medicaid rules vary by state — check with an elder law attorney in your new state to ensure your plan remains exempt.

⚠️ Common Mistakes to Avoid

• Buying a revocable plan when you need Medicaid exemption (revocable plans are countable assets)
• Funding more than the allowed maximum for an irrevocable plan
• Not ensuring the contract is truly irrevocable in writing
• Working with an unlicensed provider

✅ The Bottom Line

A properly structured, irrevocable prepaid funeral or cremation plan can be a smart part of Medicaid planning — preserving your eligibility while ensuring your wishes are honored and your family is protected from future costs.

The safest approach is to:

• Work with a licensed provider
• Keep the funding within the Medicaid‑allowed maximum
• Make sure the contract is irrevocable and clearly states the funds are for funeral or cremation expenses only
• Keep copies of all documents for your Medicaid application

Related resources:

• Florida Department of Financial Services — Funeral, Cemetery, and Consumer Services
• Florida Statutes, Chapter 497
• Florida Life & Health Insurance Guaranty Association
• Complying with the FTC Funeral Rule