Pre-Paid Burial Contracts Are Exempt Under Medicaid Even When They Cover Religious Clergy, An Organist And Memorial Service

E.H., a 78 year old female, received $1,471.50 in monthly social security benefits. On April 1, 2019, E.H.’s checking account, contained $1,991.78. On April 4, 2019, E.H. applied for benefits under New Jersey’s Family Care Aged, Blind and Disabled Medicaid program.

As part of her Medicaid application, E.H. submitted a pre-paid burial contract. Although pre-paid burial contracts are exempt assets under the Medicaid rules, the Medicaid caseworker in this case found several problems with the contract. First, the caseworker fund the contract to be illegible and, as a result, the contract could not be confirmed as complying with the requirements of the Medicaid law. Second, the caseworker found that the burial contract contained impermissible funeral expense amounts, including $595 in expenses for items related to religious clergy, organist and memorial service expenses which were found to be unacceptable funeral expenses under the regulations.  As a result, the Medicaid agency rejected $595 of the funeral expense amounts. Added to the applicant’s checking account of $1,991.78, the agency found that E.H. exceeded the Medicaid asset limitation of $2,000. This placed her over the resource eligibility limit for Medicaid benefits.

On July 3, 2019, the Middlesex County Board of Social Services (MCBSS) denied E.H.’s Medicaid application. The reason for MCBSS’s denial of benefits was based on the finding that E.H.’s resources exceeded the $2,000 asset limit as a result of disallowed expense amounts in the funeral trust.

E.H. appealed the denial of Medicaid benefits, filing for a Fair Hearing. The question on appeal was whether the expenses amounts for items related to religious clergy, organist and memorial service expenses contained in the funeral trust should be considered as assets of the applicant. E.H. argued that acceptable funeral expenses should include the religious services for the church, priest and organist, as well as a catch-all expense of memorial service.

The Administrative Law Judge (ALJ) affirmed the denial, for two reasons. First, because the funeral contract was illegible, the ALJ could not ascertain whether the applicant had properly entered into a funeral trust exempt under the Medicaid rules, and whether the funeral home had properly filed and deposited the funds with the State. Second, the ALJ held that, under the court’s understanding of the common law, “exemptions to [statutory rules] are ‘narrowly construed’ against those seeking to obtain the benefits of exclusion.”

E.H. filed Exceptions to the ALJ’s decision, and the denial was reviewed by the Director of the state Medicaid agency. The Director reversed the ALJ’s decision, holding that the ALJ’s decision with not in compliance with the regulations governing resource eligibility in the Medicaid program. The Director held as follows:

As of April 1, 2019, petitioner’s checking account contained $1,991.78. She had a burial agreement. In dispute is $595 worth of burial expenses, including costs such as the church, clergy and memorial package. That amount added to the amount in her checking account caused her resources to exceed $2,000. However, Med-Com 18-08 characterizes allowable, reasonable burial expenses to include “memorial services used in conjunction with a funeral … and coordinating or conducting funeral rites or ceremonies … “ The evidence in the record supports that the $595 in dispute are in fact allowable, reasonable burial expenses.

As a result, the Director entered a Final Agency Decision finding E.H. eligible for Medicaid benefits.

The Initial Decision by the administrative law judge is attached here – E.H. v MIDDLESEX Initial decision

The Final Agency Decision is attached here – [gview file=””]

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