Prepaid Burial Contracts and Irrevocable Burial Trusts for Medicaid in Washington

When families are trying to spend down a parent's assets to qualify for Medicaid long-term care in Washington, prepaid burial contracts come up early in the conversation — and for good reason. They're one of the few ways to convert countable assets into exempt assets that Medicaid won't touch, while simultaneously handling something the family will eventually need to pay for anyway.

But the rules have specifics that matter, and getting them wrong can create a Medicaid penalty instead of an exemption.

How Prepaid Burial Contracts Work for Medicaid

Washington's Apple Health (Medicaid) program counts most financial assets — bank accounts, investments, cash value life insurance — toward the $2,000 individual asset limit for long-term care eligibility. Prepaid irrevocable burial contracts are exempt from this count, meaning the money is no longer considered available to pay for care.

An irrevocable prepaid burial contract is the key distinction. If the contract is revocable — meaning the parent or their agent can cancel it and get a refund — Medicaid treats the refund value as a countable asset. The contract must be irrevocable to be fully exempt.

In practice, this means the parent purchases a funeral plan from a licensed funeral home, the contract is designated irrevocable, and the funds are held in trust or by the funeral home until death. The contract can cover the full range of funeral and burial expenses: casket, burial plot, headstone, funeral service, cremation, transportation, and associated fees.

What the Contract Can and Cannot Cover

Washington treats prepaid irrevocable burial contracts as exempt assets, but the amount and terms still matter. Keep the contract tied to bona fide funeral and burial expenses and retain documentation for the Medicaid review.

Common covered items include:

• Funeral home professional services
• Casket or urn
• Burial plot or cremation niche
• Grave liner or vault
• Headstone or marker
• Transportation of remains
• Embalming and preparation
• Memorial service costs

Do not assume a separate burial reserve fund is exempt just because it is designated for burial expenses. Confirm its treatment with DSHS or a qualified Medicaid planner before moving funds.

Irrevocable Burial Trust vs. Prepaid Contract

An irrevocable burial trust is not automatically equivalent to an exempt prepaid burial contract. Its terms and funding date matter, and an irrevocable trust funded during the five-year lookback can affect eligibility. Have the arrangement reviewed before relying on it.

The practical difference: a prepaid contract locks in specific services at today's prices (potentially protecting against inflation), while a burial trust holds funds that will be spent at the time of death at whatever prices apply then. Do not assume either arrangement is exempt without confirming that its structure and funding meet Medicaid rules.

The risk with a trust is execution. It must genuinely restrict the funds to burial expenses, and its terms and funding should be reviewed before the Medicaid application.

Timing and the Lookback Period

Washington enforces a 60-month lookback period on asset transfers for Medicaid eligibility. If a parent purchases an irrevocable burial contract during the lookback window, Medicaid will review whether the purchase was made at fair market value. As long as the contract price reflects the actual cost of the services purchased, it's treated as a purchase — not a gift or transfer — and does not trigger a penalty.

This is different from, say, giving $15,000 to a grandchild, which would create a penalty calculated at the state's daily divisor rate of $462 per day.

The practical advice: buy the burial contract early, before a Medicaid crisis makes every financial transaction look like an attempt to hide assets. And if the parent has already signed a revocable contract, ask DSHS or a qualified Medicaid planner how changing its terms would affect countable assets and the lookback; do not assume a conversion is penalty-free.

Getting Help With the Full Picture

Burial planning is one piece of a much larger Medicaid eligibility strategy in Washington. For a structured walkthrough of asset protection, spend-down rules, spousal impoverishment protections, and estate recovery — alongside the full comparison of care settings and how to navigate the CARE assessment — our Washington care decision guide covers the complete process.

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