Ohio Irrevocable Prepaid Funeral Contract and Medicaid Exemption

Why Prepaid Funerals Matter for Medicaid

When an Ohio family is spending down to the $2,000 Medicaid asset limit, every dollar that can be moved into an exempt category is a dollar preserved. An irrevocable prepaid funeral contract is one of the cleanest spend-down tools available — Ohio exempts the full value of an irrevocable preneed burial arrangement from countable resources with no dollar cap.

This means a family can purchase a $15,000 comprehensive funeral package and that entire amount disappears from the CDJFS asset calculation. The same $15,000 sitting in a savings account would make the applicant ineligible.

The Two Burial Exemptions

Ohio actually provides two separate burial-related exemptions, and they work differently:

Irrevocable prepaid funeral contract (no dollar limit). A contract with a licensed funeral home that covers specific services and merchandise — casket, burial vault, embalming, ceremony, transportation, plot, headstone. The contract must be irrevocable, meaning the applicant surrenders the right to cancel or receive a refund. The entire amount paid is exempt regardless of how much it costs.

Designated burial fund (capped at $1,500). A separate account or asset set aside specifically for burial expenses, formally designated in writing. This is limited to $1,500 per person. Any amount above $1,500 in a designated burial fund is countable. The interest earned on a designated burial fund is also exempt if the fund was designated before the interest accrued.

These two exemptions are not mutually exclusive. An applicant can have both an irrevocable prepaid funeral contract and a separate $1,500 designated burial fund — as long as the fund covers expenses not included in the contract (flowers, death certificates, obituary publication).

What Makes a Contract Irrevocable

The distinction between revocable and irrevocable is what determines the exemption. A revocable prepaid funeral contract — one that the applicant can cancel for a refund — is treated as a countable asset at its cash surrender value.

For the contract to be irrevocable under Ohio Medicaid rules:

• The contract must be written and state explicitly that it is irrevocable
• The applicant must not retain any right to cancel, modify, or receive a refund
• The funds must be held in trust by the funeral home or in an insurance-funded preneed arrangement
• The contract must be with an Ohio-licensed funeral establishment

Some funeral homes offer contracts that are labeled "irrevocable" but include a clause allowing the purchaser to transfer the contract to a different funeral home. Transferability between providers does not by itself settle Medicaid treatment; confirm that the contract is neither revocable nor salable for cash.

Practical Spend-Down Steps

Purchase contracts for both spouses. Each person can have their own irrevocable prepaid funeral contract. For a married couple where one spouse is applying for Medicaid, purchasing contracts for both the applicant and the community spouse is a standard spend-down move. Two contracts at $12,000 each moves $24,000 from countable to exempt.

Include everything in one contract. Funeral homes can itemize a wide range of expenses: professional services fee, preparation and embalming, casket, outer burial container, ceremony facility, transportation (hearse, family car), cemetery plot, opening and closing of the grave, headstone or marker, perpetual care. The more comprehensive the contract, the more assets are sheltered.

Get it done before the application. The CDJFS evaluates assets as of the first day of the eligibility month. An irrevocable contract purchased mid-month counts as exempt for the following month's budget. Families in a crisis planning situation should prioritize this as one of the first spend-down actions.

Keep documentation. The CDJFS will request a copy of the preneed contract during the five-year financial audit. The contract must clearly show the irrevocable designation, the funeral home's license information, and the funds paid.

What the CDJFS Looks For

The caseworker reviewing the application will verify that the funeral contract is genuinely irrevocable and not a disguised asset transfer. Red flags include:

• A contract purchased days before the Medicaid application for an unusually high amount that does not correspond to actual funeral services
• A contract with a funeral home that is a family member's business
• A "contract" that is actually a life insurance policy assigned to a funeral home but retaining cash surrender value accessible to the applicant

None of these automatically disqualify the exemption, but they trigger additional scrutiny. The safest approach is a straightforward preneed contract with a reputable funeral home that itemizes real services at market rates.

The Ohio Medicaid Long-Term Care & Asset Protection Guide includes the funeral contract checklist alongside the other spend-down strategies — home modifications, debt repayment, vehicle replacement, and the designated burial fund — so families can build a complete plan.

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