A prepaid funeral fund may seem morbid or distasteful to some. But for people who need long term care, a prepaid funeral trust may be an attractive way to put money to use that would otherwise be lost.

Long term care in a nursing home, assisted living facility or with home care aides, can cost more than $10,000 per month. Medicaid will pay for long term care, but only if applicants have less than $2,000 in resources (assets that are available to pay for food or shelter).

Money in an irrevocable account in the New Jersey prepaid funeral trust fund does not count towards Medicaid’s $2,000 resource limit. In other words, money put towards a prepaid funeral will not disqualify you from Medicaid or SSI, making it a very useful planning option.

There are a few catches. First, to qualify for Medicaid, the prepaid funeral account must be irrevocable. That means you can’t take money out after you’ve put it in. Second, any remainder left after the funeral goes to Medicaid. You use it or lose it, so it doesn’t pay to overfund the account.

Still, it’s better to put money to use in a prepaid funeral than to lose it to long term care costs.

The human mortality rate remains stubbornly fixed at 100%. Sooner or later everyone will need a funeral, and the cost can easily reach $10,000 or more. Once you go on Medicaid you can’t have more than $2,000, so if a Medicaid beneficiary dies without a prepaid funeral, it falls on family members to pay the funeral cost. That’s why prepaid funerals are important. And since there are few restrictions, prepaid funerals are a useful and versatile tool for Medicaid planning.

To learn more about creating a prepaid funeral account, you can visit the NJ Funeral Directors Association or talk with a funeral home of your choice. To learn more about Medicaid planning and long term care, call or email us at FriedmanLaw.

The federal government has proposed new regulations that govern how nursing homes, assisted living facilities and other long term care facilities treat their residents.

The Centers for Medicare and Medicaid Services (CMS) published the proposed regulations in the federal register in July 2015, and is taking public comments.

Many of the new provisions pertain to quality of life for facility residents. The regulations create new minimal standards for nursing staff – to – resident ratio, for example. It also strengthens requirements that facilities prevent infections, which according to CMS cause an estimated 388,000 deaths per year among the general populace. The regulations include a provision entitled “Freedom from Abuse, Neglect and Exploitation” that among other things prohibits facilities from employing staff who have been disciplined by a state for mistreating residents.

In one interesting provision, the regulations propose that residents who receive psychotropic drugs (which includes anti-psychotics) gradually have their doses reduced, probably as an attempt to reduce the use of chemical restraints in facilities.

These new proposed regulations aren’t yet binding rules, but they probably will be in the near future. By and large, the regulations protect facility residents and should be a welcome development for residents and their families. CMS has faced criticism of its regulations, enforcement and reporting in the past, and it is good that they are issuing new regulations.

Nota bene: For specific information on nursing home violations, families who are choosing a nursing home may find it helpful to view ProPublica’s nursing home violations database, including ProPublica’s New Jersey nursing home violations chart.