Can Medicare Help Your Loved Ones Pay For Your Funeral?
- Ease your loved one's stress by preparing for your end of life. Learn whether Medicare covers funeral expenses and what other options can assist with costs.
In 2021, the average cost of a funeral with a viewing and burial in the United States was $7,848. At $6,971, cremations are not significantly more affordable. This may cause you some concern; the last thing you want is for financial stress to compound the grief your family will feel at your passing. It can be helpful to know if Medicare covers funeral expenses or if there are other options that can help your loved ones pay for your burial.
Does Medicare Cover Funeral Expenses?
Funerals aren’t considered medical expenses, so Medicare doesn’t cover them at all. There are also no Medicare death benefits that can help surviving spouses or children defray the cost of burial. In fact, there is only one circumstance when Medicare funds can help pay for a funeral, and that’s through a Medicare Medical Savings Account.
Medicare Medical Savings Account
A Medicare Medical Savings Account, or MSA, is a type of Medicare Advantage plan. These plans have a high deductible, and Medicare won’t pay for any medical costs until the deductible has been met.
Instead, beneficiaries open a specialized savings account and their Medicare plan deposits money into it to cover medical-related expenses. These funds can be used to pay for medical expenses prior to meeting the deductible.
As money is paid into the savings account in advance, a proportion of the money has to be returned to the government after the beneficiary passes away. However, any other money leftover becomes part of your estate.
If you have a spouse who also has an MSA, they can use the money for their medical-related expenses. However, money can also be used for funeral expenses and end-of-life costs. It’s important to note that any funds used for something besides medical expenses, such as a funeral, are taxable. The money can also take time to be passed along, so your loved ones may not receive it until after your burial.
As MSAs are a high-deductible insurance plan, they’re not appropriate for everyone. It’s better to choose a Medicare plan based on your medical requirements rather than any future funeral costs. Counselors at your local State Health Insurance Assistance Program (SHIP) can help you choose the best Medicare plan to suit your needs.
What Happens With Medicare When Someone Dies?
Your loved ones must report your death to Social Security as soon as possible. This can be done by phoning 1-800-772-1213. Social Security notifies Medicare and other agencies. Some funeral homes handle this notification; your family will need to provide them with your Social Security number.
How Can I Help Loved Ones Pay for My Funeral?
Although Medicare doesn’t cover funeral expenses, there are other options to help your family pay for your burial costs.
There are two types of funeral insurance. Standard insurance pays benefits to the person named as your beneficiary, who can use the money for anything, including a funeral. Pre-need funeral insurance is paid directly to the funeral provider and can be purchased directly from a funeral home or through an insurer. As they lock in costs at today’s prices, pre-need funeral insurance protects against inflation.
In both cases, you may end up paying more in premiums than the cost of your burial. However, it does ensure your loved ones have the funds to pay for your funeral.
Funeral Trust or Payable on Death Account
Certain bank accounts can be set up for burial savings. A payable-on-death (POD) account automatically transfers money to a beneficiary on your death while a trust is subject to various conditions depending on the bank and how it’s set up. In both cases, money can be put aside to pay for your funeral upon your death.
Social Security Death Benefit
The Social Security Lump Sum Death Benefit pays $255 to surviving family members to help pay for a person’s funeral. Although this is much less than the average cost of a funeral, it can help with expenses.
The US Department of Veterans Affairs can help pay for the burial of people who served in the United States military. For non-service related deaths, the benefit includes money for funeral expenses as well as a plot-interment allowance if the person isn’t buried in a national cemetery. Those buried in a national cemetery receive a grave, headstone and perpetual gravesite care at no cost to the family.
Many states, counties and cities provide extra help to pay for the burial of low-income residents. As every state has a different program, it can be difficult to find information about these programs. Often your state’s Department of Human Services can help, or your local Area Agency on Aging may be able to direct you to nearby resources. It can be helpful to investigate this yourself so you can provide information to your surviving family.
Whole Body Donation
You may wish to donate your body to science, known more formally as “whole body donation.” A donation like this lets you help train medical students and advance medical research after you’ve gone. Your body contributes to a variety of different projects and is then cremated. If requested, your remains can be returned to your family. Whole body donation also removes all costs associated with a funeral.
How Funeral Planning Can Impact Social Security
If you choose to save money for a funeral or purchase burial insurance, you may be concerned about the impact on your Social Security income. Generally, Social Security recipients can put aside $1,500 per person for burial expenses without it impacting Social Security eligibility. Likewise, most states allow Medicaid recipients to have a burial trust that isn’t counted as an asset for eligibility purposes. In all cases, you should check eligibility requirements to ensure you’re following the government’s rules.