Thinking about Medicare and funeral expenses is a task we all wish we could avoid. However, the cost of a traditional funeral is about $8,500. You should plan for it like you would with any other large expense.
Some individuals plan to leave money in their will to help family members pay for funeral costs. While this is option could work, it’s not the best plan.
The problem is a matter of time. Processing your will and properly distributing benefits doesn’t happen immediately. In fact, it could take anywhere from a few months, up to a year before survivors receive money or benefits from your will.
Funeral, burial and/or ceremonial arrangements are generally made within only a few weeks following one’s passing. Most funeral homes want payments made in-full prior to the service.
Your survivors may have to pay out-of-pocket to cover expenses and then wait for reimbursement – if you plan to use funds from your will for funeral costs.
However, you may have alternative options for covering funeral expenses. It’s important to know what options are available.
Does Medicare Cover Funeral Expenses
Are you looking to see if funeral expenses are a tax deduction? Or maybe you’re wondering if your Medicare benefits will help cover funeral costs. Unfortunately, Traditional Medicare doesn’t cover the costs of funeral and burial services or death benefits. However, Medicare offers a type of Medicare Advantage plan that might help.
Furthermore, Medicare Medical Savings Account (MSA) is a type of Advantage plan that might be able to help with funeral costs. Financial assistance is available for many seniors, knowing where to look is important.
Can you get Social Security burial assistance to help pay funeral expenses
Social Security will pay a small death benefit if the person has a surviving spouse. Some states may pay towards funeral costs for people who receive disability, are on Medicaid, or are indigent.
Some states offer victim compensation funds for DUI or murder victims; in a devastating time, this assistance can provide great financial relief.
When looking for help with paying for funeral costs, some individuals will take the government funding route; seeing if they can get Social Security burial assistance. For some states, people who qualify for Supplemental Security Income may be able to set aside a small amount of money to help with funeral expenses.
Prior to receiving benefits or help, Social Security reviews your finances and any assets you may have to determine if you qualify for assistance. When they do this, the money that’s set aside for your funeral doesn’t count towards qualification. As of 2017, the amount set aside can be no more than $1,500 for you and an additional $1,500 for your spouse.
So, let’s say you have $3,000 in your bank account, and you apply for SSI assistance. Assistance can include monthly payments to you for your basic living expenses. You must have less than a specific amount of money in your account to qualify for assistance.
In other words, if you have more than the allowable amount, (excluding the money set aside for funeral costs) than, you might not qualify for assistance.
How to Put Money Aside for Medicare and Funeral Expenses
Medicare doesn’t offer a program that allows you to set up a burial account. On the other hand, there might be a way to set money aside for your survivors to help with funeral expenses.
Medicare Savings Accounts (MSA), are like Medicare Advantage Plans. Both are available through private health insurers that contract with Medicare.
The Medical Savings Account plan will set you up with a savings account for medical expenses. Once your account is set up, you can use it to pay your health-care costs. MSA plans are high-deductible plans that allow you to choose a beneficiary.
Depending on when the funds are put into the account, part of the money will go to your chosen beneficiary when you pass away if you request it.
After enrolling in a Medical Savings Account plan, you can request your beneficiary to use any remaining funds to cover your funeral expenses.
Additional help is available for assistance with covering the costs of a funeral. If you don’t check all available options, you may be missing out on benefits resulting in unnecessary financial responsibilities.
Check for survivor benefits from any of the following agencies, Social Security Administration, Railroad Retirement Board, United States Department of Veterans Affairs, and your state insurance department.
Can You Deduct Funeral Expenses From Taxes
Medicare and funeral expenses aren’t cheap. A common question that taxpayers ask every year is “Can I deduct funeral expenses?” According to the IRS, no individual taxpayer can deduct for a funeral or death-related expenses.
On the other hand, this isn’t the case for estates. An estate can claim deductions for certain costs if death-related expenses are paid specifically by the estate of the deceased.
While this may be true, the total value of the estate must be higher than a certain amount to be required to pay the estate tax. In 2018, that value was $11.18M.
Meaning, in some cases, funeral costs can be deducted from taxes. However, the deceased must have an estate worth over $11M.
Most American taxpayers don’t have estates that qualify for deductions. In fact, many don’t even have estates. Meaning, each year more people take on the financial responsibility of their loved one’s funeral without getting any tax relief.
However, you may be able to set up a bank account that the Internal Revenue Service (IRS) refers as a “qualified funeral trust.” A qualifying tax preparer or attorney can give you further details if this interests you.
Expenses That Count Towards the Deductible
For those with estates that qualify, certain expenses are deductible. Any burial and memorial services directly related to homegoing ceremonies can be deducted (services must be reasonable).
For instance, body preparation services such as embalming, or cremating are deductible expenses. The detention of the body in a casket or cremation urn, costs of hiring a funeral director and using a police escort are all examples of deductible services.
Tax breaks for ceremonial items like floral arrangements, catering services or musical accompaniment may also be available. Save all receipts and review your expenses with a tax expert to ensure you claim all possible deductions.
Learn More About Medicare
Medicare offers many types of plan options. Some options may assist with reducing health-care costs so you can set aside more money for your funeral expenses. Saving on Medicare can mean more money for funeral expenses.
Understanding all the options available to you can be overwhelming, but don’t worry! We’re here to help.
Our team of licensed agents is happy to do all the hard work for you. Give us a call today at the number listed above, or you can fill out one of our online forms.