Medicaid Asset Exclusion and Spend-Down Compliance
Strategic Financial Positioning of Preneed Policies
Preneed Funeral Insurance plays a vital role in long-term care planning, specifically for Medicaid eligibility. In many states, an "irrevocable" preneed contract is considered an excluded resource. This means the money placed into the policy is not counted toward the individual’s asset limit (usually $2,000) when qualifying for nursing home care.
To qualify for this exclusion, the policy must be made "irrevocable," meaning the purchaser cannot cancel the policy for a cash refund. This technicality ensures that the funds are used solely for end-of-life expenses. This document details the "assignment of ownership" process required to convert a revocable policy into an irrevocable Medicaid-compliant asset.

