Prepaid Burial Plan Medicaid Montana: How Funeral Plans Protect Assets

How Burial Plans Fit Into Medicaid Planning

Montana Medicaid requires countable assets to be at or below $2,000 for a single applicant. One of the clearest ways to reduce countable assets below that threshold is converting cash savings into an irrevocable prepaid burial plan — an asset category that Medicaid treats as exempt.

This is not a loophole. Funeral preplanning is a recognized and legitimate spend-down strategy under both federal Medicaid rules and Montana's DPHHS policy. The key requirement is that the plan must be irrevocable, meaning the applicant cannot cancel the contract and recover the funds.

Irrevocable vs. Revocable Plans

The distinction between irrevocable and revocable burial plans is the entire ballgame for Medicaid purposes.

An irrevocable prepaid burial plan cannot be canceled or cashed out by the owner. Once the contract is signed and funded, those dollars are permanently committed to funeral and burial expenses. DPHHS does not count these funds as available assets.

A revocable plan can be canceled, and the funds returned to the owner. DPHHS counts the full cash surrender value of a revocable plan as a countable asset, which means it works against Medicaid eligibility rather than for it.

When purchasing a burial plan as part of Medicaid spend-down, insist on an irrevocable contract. The funeral home or insurance company providing the plan should be familiar with this distinction — it is a routine request in the Medicaid planning context.

What Burial Plans Can Cover

A comprehensive prepaid funeral plan can cover a substantial range of expenses, absorbing several thousand dollars that would otherwise count against the $2,000 asset limit:

• Casket or cremation container
• Funeral service and ceremony costs
• Embalming and preparation
• Transportation of remains
• Cemetery plot and opening/closing fees
• Headstone or grave marker
• Flowers and memorial items
• Death certificates (typically multiple copies)
• Clergy or officiant fees

The plan should be tied to legitimate funeral expenses and documented with the contract and funding records. An unusually inflated plan designed purely to shelter assets invites DPHHS scrutiny.

The $5,000 Limitation on Estate Recovery

One important detail: under MCA 53-6-169, Montana does not permit an undue hardship waiver for estate recovery claims against unused portions of prepaid burial contracts exceeding $5,000. If the prepaid plan was not fully used — because actual funeral costs came in below the prepaid amount — the state can claim the excess above $5,000 from the remaining balance after death.

This means families should plan burial expenses realistically rather than overfunding a plan as an asset-parking strategy. The irrevocable plan protects assets during the applicant's lifetime for Medicaid eligibility purposes, but unused excess above $5,000 is subject to recovery after death.

Burial Plans for Spouses

Both the Medicaid applicant and their community spouse can each have a separate irrevocable prepaid burial plan. This effectively doubles the amount of assets that can be converted to exempt status.

For a married couple facing a Medicaid application, setting up two burial plans — one for each spouse — is a standard component of the spend-down strategy, along with paying off the mortgage, making home modifications, and addressing any deferred vehicle or property maintenance.

How to Set Up an Irrevocable Plan

Contact a local Montana funeral home and request an irrevocable preneed funeral arrangement. The funeral home will provide a contract specifying the services and merchandise selected, the total cost, and the irrevocable designation.

The plan can be funded through a lump-sum payment or sometimes through a funeral insurance policy assigned irrevocably to the funeral home. Ask DPHHS how it treats the chosen funding method; the critical documentation is the irrevocable designation in the contract language.

Keep a copy of the signed irrevocable contract. DPHHS will request it as part of the Medicaid application's asset documentation. The contract proves the funds are committed and should not be counted as available resources.

For a complete spend-down strategy that includes burial planning alongside other asset reduction methods, the Montana Medicaid Long-Term Care & Asset Protection Guide walks through each exempt category with Montana-specific rules and documentation requirements.

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