When you die, your Medicare coverage dies with you. There is no death benefit associated with the federal Medicare program. However, if you have a Medicare Medical Savings Account (MSA) and there is any money left over at the time of death, the spouse or other beneficiary may use that money to help cover the funeral costs.
Most people happily plan for their retirement, but not as many happily plan their own funeral. It’s just not as much fun to ponder what’s going to happen after you die. But it is important to think about, as well as plan for, to ease the pain of death on loved ones.
It’s especially critical if you’re leaving behind a spouse or children who you don’t want to burden with your funeral or burial expenses. In 2021, the median funeral costs were $7,848 for viewing and burial, as reported by the National Funeral Directors Association (NFDA). For cremation and viewing, the average funeral expenses were $6,971. Those are no small sums of money for your family to come up with upon your demise.
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Details of burial and funeral expenses
What exactly does a funeral entail that makes it so expensive
? A lot of that depends on how big it is, what kind of service, and, to be brutally honest, how the body is handled. For one thing, cremation is a more affordable option than having the deceased embalmed and buried in a casket.
Another consideration is the fee for the use of a funeral home and its staff, for both services and disposition of the body. Plus, you will have to purchase a casket if the body is to be buried, or an urn if it’s to be cremated. You also need to think about flowers or other adornments, and whether there will be a reception to follow.
As you can see, there are a lot of details to contend with as you put together a funeral. There are many ways to make it less expensive. For instance, skip the service and go with cremation over burial, but it’s still going to cost you.
|Non-declinable basic services fee
|Removal/transfer of remains to funeral home
|Other preparation of the body
|Use of facilities/staff for viewing
|Use of facilities/staff for funeral ceremony
|Printed materials (basic memorial package)
|Metal burial casket
|Median Cost of a Funeral with Viewing and Burial
|Total with vault
|*The overall rate of inflation was 13.98% for the same period.
|Source: National Funeral Directors Association
Does Medicare cover funeral expenses?
Medicare is federally-funded health insurance coverage provided for adults 65 years and older. However, its eligibility also includes disabled individuals of any age. (Medicare should not be confused with Medicaid services, which are state and federal government programs providing health insurance for people with low incomes.)
There are several Medicare healthcare plan options, but unfortunately none of them include a death benefit to help cover funeral expenses. Death is not considered a medical expense. However, there is a small loophole that may offer some assistance for families after a loved one’s death.
There are two main options for Medicare coverage: Original Medicare, which allows you to purchase Medicare Supplement Insurance plans (Medigap), or Medicare Advantage plans. If you opt for Medicare Advantage, you can choose one of their high-deductible plans that also includes a Medicare Medical Savings Account (MSA).
Medicare Advantage MSA plans
The Medicare Advantage MSA plans come in two parts. They combine a high-deductible insurance plan with a medical savings account that you can use to pay for your healthcare costs.
- High-deductible plan. The Medicare Advantage Plan (Part C) is the first part, and will only begin to cover your costs once you meet a high yearly deductible. This is variable, depending on the plan you choose.
- Medicare Medical Savings Account (MSA). The second part is a special type of savings account. The Medicare MSA Plan deposits money in a savings account for you to use to pay medical expenses. The amount of the deposit varies by plan. The plan is designed for you to use this money to pay your Medicare-covered costs before you meet the deductible.
When you die, there might be some money left over in this account. If there is, it becomes part of the estate and the surviving spouse would be eligible to inherit those funds. Keep in mind that if the Medicare beneficiary is someone other than your spouse, that money would count as gross income and need to be reported on their income tax return.
The big question now, though, is if there is actually any money left in the account. Only money that was deposited into the MSA prior to the year of death becomes a part of the estate. Any money that was accumulated, but not used for qualified medical expenses in the current year, must be paid back.
So the bottom line is: does Medicare cover funeral costs? No, but your MSA might have some funds left over after medical expenses that could contribute to burial costs.
Other ways to cover funeral expenses
Unfortunately, most Medicare members can’t count on an MSA to help cover funeral costs. It likely wouldn’t cover everything anyway, so you may need to consider some other options
Social Security benefits
The Social Security Administration will pay survivor benefits to qualifying family members with certain restrictions, and some of this money could pay for funeral expenses.
In addition, a surviving spouse or child may qualify for a one-time lump-sum death benefit of $255. It’s not much, but it could help with the final arrangements. Check with your local Social Security office to see if you meet the requirements.
If the deceased is a veteran, they might be eligible for a veteran’s burial allowance. There are some requirements to meet, but you could get up to $2,000 to help pay for funeral costs
Ask state agencies
For example, check with your local Department of Health and Human Services to see if they might be able to provide any help covering funeral costs. Oftentimes, these agencies will provide some type of funeral assistance for qualifying individuals, such as those already receiving federal or state aid.
If the deceased was a member of a church or other organization, family members could contact them for financial or other assistance. At the very least, these groups can provide some comfort and support to the bereaved, and may have other ideas about how to get help with funeral expenses.
If you’ve exhausted all local, federal, and state programs, and still need more funds to cover the remaining funeral costs, you might think about getting a funeral loan. This option may be affordable for borrowers with good credit, as are personal loans. Chances are you can get a reasonable interest rate and have the advantage of paying the loan off over time, rather than tapping into your emergency savings.
An even better option than having to scramble to cover funeral costs is to sort these things out ahead of time. Ideally, these will be conversations that you have with your spouse or family long before your demise. It might be uncomfortable at first, but everyone feel better knowing that the details were already decided.
Make a will
It’s not like anyone can predict their death, so making a will is one of the best things you can do to ensure that your family is comfortable. You also want your assets divided up between your heirs exactly as you wish. As part of your will, you can also save your family the trouble of trying to guess what you wanted by detailing your wishes for after your death.
You should include whether you prefer a burial, cremation, or perhaps a green burial which lessens the impact on the environment. You also want to consider what type of service you want, if any, or if there will be a social gathering afterward. The point is, the more details you iron out now, the fewer decisions your loved ones will have to make later while grieving your passing.
Try to have your affairs in order prior to your death to ease the burden on the surviving spouse and other family members.
Even if you think your retirement funds will be enough to support your surviving spouse and dependent children, you might want to talk to a licensed insurance agent about some other options.
This includes choosing a comprehensive life insurance policy. It’s always good to secure a life insurance policy long before you die. The nice thing about life insurance is that it doesn’t have to go through the probate process — it’s disbursed directly to the beneficiary
immediately after death.
Another type of life insurance, final expense insurance (also known as burial insurance), is meant to handle any “final expenses” at the time of your death.
The death benefit, paid to the beneficiary, is important financial assistance to use for burial or funeral costs, outstanding medical expenses, or any other last-minute bills that are typically not cleared up before a person dies. Usually, these policies’ benefits range from $2,000 to $50,000.
Will Medicaid cover funeral expenses?
Neither Medicaid nor Medicare services cover funeral expenses or the costs of cremation or burial. However, rules established under Medicaid enable recipients to earmark funds for their own funeral and burial. Under these rules, such funds are excluded from the accounting of assets recorded when determining eligibility for benefits. They can set aside these funds in a separate account, or prepay at a funeral home.
For instance, Medicaid beneficiaries located in Colorado and Wisconsin can receive up to $1,500 in funeral assistance. Those in Indiana can receive up to $2,000 in assistance, split between a maximum of $1,200 for funeral costs and $800 for a cemetery plot.
How do you bury someone with no money?
If you find yourself unable to pay
for a loved one’s funeral with any of the options suggested, you can sign over the body to the county coroner’s office and they will handle cremation or burial for you. There will be no services and this may not be the ideal scenario, but neither should anyone have to go bankrupt to pay for a funeral. You can always have an inexpensive, informal memorial for the deceased at a later date.
- The federal Medicare program, including Original Medicare or the Medicare Advantage plan, does not officially pay for any funeral or burial expenses.
- If there is money left over from a Medicare Medical Savings Account, beneficiaries could use those funds for funeral costs upon the Medicare beneficiary’s death.
- You have alternative methods of paying for funeral costs if the deceased doesn’t leave enough funds to pay for funeral or burial expenses and the family isn’t able to cover the rest.
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