If you decide to prepay for your funeral, the funds you have set aside for your funeral must be placed into an irrevocable contract with a funeral planner or funeral home. This is an acceptable way to keep your money from being counted as an asset by Medicaid.

There is no "Look Back" period for this type of transfer. This means that it is not subject to the five-year asset transfer rule imposed by the federal government for Medicaid qualification. Normally, the government will include any asset you transfer at any time during the five years prior to filing your Medicaid application. This does not apply to irrevocable funeral contracts and trusts, because the law prohibits any withdrawals or changes to this type of contract. It can only be used to pay for funeral expenses.

If you choose to use a traditional life insurance policy with an initial face amount of more than $1500 to pay for your funeral expenses, be aware that the policy (e.g. Final Expense policy) cash value is considered an asset and will count against you when it comes to qualifying for Medicaid