Policy Features And Eligibility Requirements
In addition to covering several types of final expenses, a funeral insurance policy is attractive for other reasons as well.
Policies are often written for coverage amounts that range from $5,000 to $25,000 in coverage. You can decide on the benefit amount based on what your personal projected final costs will be. The differs quite a bit from traditional life insurance, where policies are often written for $250,000, $500,000 and more.
The purposes of each are different as well. Final expense insurance is dedicated primarily to the funeral and related expenses. Life insurance protects surviving family members with expenses going forward, such as long-term mortgage, car payments, health insurance, college expenses, and other ongoing quality of life costs.
Because funeral insurance policies are whole life policies, a cash value can accumulate over time. That cash value gives you added flexibility in case you want to tap into those funds.
You can designate anyone you want to be a beneficiary of the policy. Be sure they are comfortable handling the financial aspects of the policy when you pass away. They will need to be a gatekeeper for the funds during a difficult period, so choose wisely.
Additional benefits may be awarded in the case of accidental death. Be sure to ask your insurer about this provision when shopping for a policy.
Can You Pass Along Benefits Upon Death
Some traditional insurance products offer the ability to continue benefits for family members listed on the policy following the policy holders death. Medicare insurance does not provide an option for this. Because each plan applies only to the individual to whom the plan was issued, benefits cant be passed on to others upon death or for any other reason.
Does Medicare Cover Funeral Expenses
Unfortunately, that answer is no. Medicare covers medical expenses, but death isnt a qualifying event. You may spend years planning retirement fun, but nobody rushes to plan their funeral. Yet, the cost of a funeral falls between $7,000 and $10,000 on average. In the sections below, we go over funeral coverage and opportunities for Medicare funeral assistance.
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Donating A Body To Science
You may be surprised to learn that some universities will not pay to have a body transported to their facilities for study. Although, once the body is in their care, the university or medical school will often take care of the expenses associated with cremation.
There are government programs available to help pay for the transportation of the body to the facility for study. For example, a Michigan program will pay up to 32 cents per mile up to $176 to transport a body from a funeral home to a university program.
Donating your body to science has two benefits. First, you are helping the greater good by providing a body for students to study. Also, even though transportation to a facility is not always free, you wont have to pay for the expense to cremate the body.
How Do I Report The Death Of A Loved One
Medicare provides a telephone number for a surviving spouse or other family member to call to report the death of a person on Medicare. Have the deceased loved ones social security number with you when you report the death of a Medicare beneficiary. It is important to note the following:
- It is not necessary to report the death of a loved one to both Medicare and the Social Security Administration.
- Most funeral homes report the death of a Medicare beneficiary to Medicare or to the Social Security Administration. However, some families may want to report the death themselves.
- Once you report the death, ask the questions that are important to you, such as when you or the eligible loved one will receive the death benefit or when will the survivors benefits start.
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Reimbursement For Cash Payments For Medical Services
Medicare offers reimbursement, up to the 80 percent limit, for covered health services received by a person enrolled in Medicare and paid for in cash. If the individual dies with non-reimbursed expenses, the estate may file a claim to receive the funds. Likewise, a child or spouse who paid for expenses out-of-pocket can file a claim separate from the estate’s claim.
Is There A Death Benefit From Medicare
Now, the portion of long-term benefits that a surviving spouse or children will get depends on the amount the deceased paid into Social Security. Further, the benefit amount depends on the survivors age and Social Security eligibility.
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Does Reporting A Death To Medicare Cancel Other Insurance As Well
Many people have additional forms of insurance when theyreon Medicare, such as a Medicare Advantage plan, a Medicare Supplement Plan, ora Medicare Part D Prescription Drug Plan. Reporting a death to Medicare doesntcancel these plans. Youll need to contact the carrier or carriers to notifythem, and they may require proof of death, such as a death certificate orobituary from a newspaper. The carrier will let you know what paperwork youneed to submit, and you can find their contact information listed on theinsurance card.
How To Cancel Supplemental Medicare Insurance When There Is A Death
Often, recipients also have additional coverage, such as an Advantage plan, Medicare Supplement, or Part D prescription drug coverage. Alerting Social Security about the passing doesnt cancel any of the above. It only takes care of Original Medicare.
Youll need to contact each carrier to notify them, which may require proof and paperwork. You can find the information you need to reach each plan provider on the deceaseds insurance cards.
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If youre unsure of which coverage they had, you can check their bank statements for recurring payments of monthly premiums to look for the carrier names. If you and the deceased didnt share a home, you could also have their mail forwarded to your address.
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The Nature Of Social Security Death Benefits
The Social Security Administration automatically notifies Medicare to stop coverage and premium payments upon reporting the loss of a loved one to Social Security.
Reporting the departure of a beneficiary marks the beginning of the Social Security death benefits.
If the deceased leaves any unpaid medical bills, Medicare sorts out 80 percent of the total bill as agreed in national standards.
If the late beneficiary also had a secondary insurance plan, such as a Medigap plan or Medicare Advantage plan, that plan pays its agreed upon amount regarding final medical bills. After that, the recipients estate pays any remaining amount.
If the individual dies without being properly reimbursed for out-of-pocket final medical expenses from Medicare or the secondary insurance company, then a separate claim to receive those reimbursements can be filed by the estate, child, or spouse who covered the cost.
Why Do Funerals Cost So Much
The average funeral costs around $10,000. If you donât want to burden your family with this expense itâs necessary to have a plan.
Unless youâve planned a funeral, you probably arenât sure what the costs include. Hereâs a breakdown of funeral expenses with a brief explanation of each.
1. Funeral home
- Use of the funeral home for viewing and ceremony: $595-$915
- A âbasic servicesâ fee: $1,800-$2,000
2. Removal and transfer of remains
- Transporting the deceased: $320-$725
3. Embalming and other preparations
- Body embalming: around $695
- Other body preparations: around $250
4. Hearse and car services
- Hearse: $275-$32
6. Casket and burial vault
- Casket liner: $700-$1,000
- Burial vault: $900-$13,000
- Casket: $2,000-$10,000
We always want the best for our loved ones, but elaborate caskets can cost $35,000 or more.
- $1,500-$3,000 if done through a crematory
- $2,000-$4,000 if done through the funeral home
- Floral tributes or wreath: $100 or more
- Casket sprays: more than $700
9. Catering/Food: this is often done through your church or friends, but if not, it can cost several hundred dollars to feed everyone
10. Obituaries: if not included in the funeral home basic fees, it runs $200-$500
11. Gravestone/Grave marker
- Grave markers: $95-$1,000
- Upright stones: $1,000-$10,000
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What Should I Do If Im Not Sure What Insurance To Cancel
Several of the steps you should take when someone passes canalso alert you of whether you need to contact an insurance carrier. Forinstance, when you go to the deceaseds bank to close or change their account,you can also ask for the past few monthly statements. Review the statements forreoccurring withdrawals, and contact the carriers that are listed. The bank mayeven be able to give you the carriers contact information if you tell themthat you need help identifying the charge listed on the statement. In additionto this, you can notify the post office and leave a forwarding address so thatany bills or notifications wont go unnoticed.
What Is Life Insurance And Why Do I Need It
Life insurance is a financial tool meant to provide financial stability if your loved ones need you to be financially responsible for themespecially in the event of your passing. The basic tenet of life insurance is that the premiums will take care of the death benefit.
If you and your family are healthy, you may not need a life insurance policy, but it might not hurt to have a policy. If you suffer a catastrophic injury that leaves you disabled or terminally ill, a life insurance policy can help provide financial stability.
Life insurance is not just for young families. It may provide money for your beneficiaries if you pass away. It may also provide income for your retirement or if you are not eligible to work. You may need life insurance to merge debts or for an investment in your childs education, or just to cover unexpected expenses.
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Can Medicare Advantage Help With Funeral Expenses
And if there were one place to look for a life insurance-like benefit within Medicare, it would be within a Medicare Advantage Plan .
Private insurance companies offer Medicare Advantage plans as a way for seniors to get their Medicare benefits bundled with coverage for additional services seniors typically need.
Medicare Advantage plans are known for providing coverage that Original Medicare misses. However, life insurance is not one of them.
Other Ways To Pay For Final Expenses
If youre undecided about a final expense policy, or money is tight and youre exploring options, consider some of these other ways to offset funeral expenses:
- Military Death Benefit. If the decedent was currently serving or is an honorably discharged veteran, there are some limited benefits available through the Veterans Administration, such as burial flags and headstones or grave markers. The VA will pay up to $2,000 for a service-related death for burial expenses on or after September 11, 2001, or $1,500 for deaths before that date. For a non-service-related death, the VA will pay $796 toward funeral expenses on or after October 1, 2019, as well as other monetary benefits if you qualify. You will need to meet several eligibility requirements and supply evidence of the death and expense costs to collect the benefit.
- Direct cremation. A simple, no-frills form of cremation that can cost as little as $400.
- Medicaid. If you are covered by Medicaid, see if any funds are available in your state for funeral expenses.
- Supplemental Security Income. Funeral expense coverage may be available if you are a low-income SSI recipient.
- Indigent burial programs. Check with your countys department of social services to see if they offer this service.
- Body donation. Made to a local university medical school or private organization to support research and education.
- Burial on the family property. Some states allow this. Check local zoning laws and health regulations.
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What Are Typical Final Expense And Funeral Costs
While your loved ones do get a $255 lump sum from the Social Security Administration that can be used toward your final expenses, this wont make much of a dent when you consider the cost of a funeral in the United States.
According to the National Funeral Directors Association, the median cost of a basic funeral in 2021 was $7,848. This does not include a burial vault something that is required by many cemeteries grave monuments or markers, an obituary, and other extras. That price tag does include:
- Transfer of remains to the funeral home
- Use of facilities for viewing and ceremonies
With a vault included, the median price jumps to $9,420, but this also does not include additional costs for markers, monuments, obituaries, and more. The cost of cremation is a bit less roughly $6,970 with a funeral viewing service included.
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How Can My Spouse Obtain Coverage
Because Medicare benefits cant be shared between spouses, each individual in a marriage will need to obtain their own plan. If your spouse has met all of the eligibility requirements for Medicare, they will need to reach out to Medicare online or at a local office to enroll. Additionally, your spouse can work with an insurance broker to discuss their individual needs to find a plan that works.
Setting Aside Funds For A Funeral On Medicaid
Additionally, Medicaid recipients can set money aside in a separate account or prepay a funeral home if they desire. These funds are excluded from the accounting of assets recorded when determining eligibility for benefits, and interest earned does not count as a resource. To do this, there are typically three options offered by states:
You can also establish an irrevocable trust, which protects the money you set aside and allows it to be used to cover long-term care costs if necessary. If you choose to establish a trust, you may want to talk with a trust and estate attorney to ensure youre preparing properly and to get advice on the best way to do this.
They can also help you understand the rules of Medicaid. For example, to qualify for funeral payment under Medicaids rules, the trust must have existed for at least five years.
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What Is Final Expense Insurance
A final expense policy is a type of life insurance that’s designed to eliminate any financial loose ends when you pass away. These policies feature a guaranteed death benefit that’s payable to your beneficiary.
The proceeds of a final expense policy can be used to cover funeral, cremation or burial costs, as well as outstanding medical bills, credit card debt or any other end-of-life expenses.
Generally, final expense insurance is available to people aged 50 to 85, although some insurance companies may set the cutoff at age 80. Depending on the insurer you purchase the policy from, you may have the choice between term and permanent coverage, with benefit amounts typically ranging from $5,000 to $50,000.
Funeral Costs: What To Expect
Lets be clear. One of the reasons final expense insurance is available is because funerals are not cheap. Average funerals now cost more than $10,000, with costs more than double that amount in many cases.
Where you live does have some impact on costs.
The National Funeral Directors Association released a General Price List Study in 2019 that shows the median cost for a funeral has increased by 6.4% over the past five years. A median cost for cremation has also increased by 7.3% over the same period.
Because funeral costs were the subject of complaints about unfair and predatory business practices a few years back, Congress passed The Funeral Rule of 1984, which is now administered by the Federal Trade Commission.
Under this law, consumers have a right to transparency of costs and the right to buy separate goods without being pressured to buy a package deal. You also have the right to see an itemized list of services, the right to use an alternative container for cremation, and the right to provide the funeral home with a casket or urn you purchased elsewhere, among many other protections.
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Using A Medicare Msa To Pay For Funeral Costs
Your loved ones could potentially use a Medicare Medical Savings Account to help cover funeral costs. An MSA is a Medicare Advantage plan that sets up a bank account for you to use to cover your health expenses. It is only available in some states and has a high deductible.
Anything left in the account when you die becomes part of your estate and could go back to your family or beneficiary and be used toward your final expenses. The funds may not cover everything because funerals can be costly. Depending on how quickly your family moves forward with burial services, the money might not be available in time.