Exploring Cash Advance Items in a Prepaid Funeral Plan

 Last week's blog post featured great information and a flyer from Funeral Director's Life Insurance Company answering the question "What are cash advance items in a prepaid funeral plan?" Part of this post provided a list of the types of items that one may consider adding to your prearrangement. This week's blog is going to explore in more detail, what these items are and how costs are associated with them so that the consumer has a better understanding of how important it is to add cash advance items to prepaid funeral plans. 

Here are the types of items you may consider adding to your plan: 

 Death certificate allowance (most families end up needing 5-10 death certificates from the county).

The death certificate is the legal document signed by a physician, coroner, or medical examiner stating that you have died. This document provides valuable information to your loved ones in terms of the date and time of your passing as well as the cause and manner of your death. In many states, this document also provides vital statics information about you including your date and place of birth, address at the time of your passing, as well as your social security number. Most of the time, it will provide the name, address, and relationship of the person handling your funeral arrangements. 

The death certificate is required to be presented to any business or institution where you have an open account. Such institutions include banks, utility companies (electric, water, sewer, gas, cable, telephone, etc.), and/or insurance companies (home, auto, and life) all want copies of the death certificate. Since COVID-19, many of these businesses or institutions are willing to accept Xerox, faxed, or emailed copies which helps families from needing multiple legal copies. For those who require a legal copy, oftentimes they are willing to make their own copy of the document and release the original back to your family. 

Obituary and death notice fees. 

Most of the time the funeral home will offer to place a death notice or obituary on the funeral home's website at no charge. What will cost extra normally would be a death notice or obituary that runs in the local newspaper. Here in Northeast Ohio, the local newspaper, The Plain Dealer, the price of a death notice begins at approximately 400.00. 

Clergy honorariums. 

Clergy honorariums are funds that are paid to the church for a funeral mass or to a clergy member who performs a funeral service at the funeral home or cemetery. For Catholics who are having a funeral mass, this honorarium is normally a set fee. For those of the Protestant faith, clergy will usually take a donation of whatever the family can offer, although some may still have a set fee. 

Vocalist/musician honorariums.

Vocalists or musician honorariums are funds that are paid to those who may be performing during the funeral mass. Oftentimes, these charges are included in the clergy honorarium charges. These may not be included if you hire a harpist, vocalist, or other musicians to perform at the visitation or any other services. 

Clothing

Clothing charges would be included in the event that you have the funeral home purchase special items of clothing for you to wear. Most of the time your family will provide the funeral home with clothing from your closet or dresser to be worn. 

Police Escort.

Police escorts are used when there is a funeral procession. It is their job to assist in getting the funeral procession safely from place to place. Many times this charge is not considered a cash advance by the funeral home, especially if the funeral home provides escorting services themselves and does not hire an outside company to handle this for them. 

Flowers.

Flowers are considered a cash advance item because many things can influence the final charges. The type of flowers used (roses tend to be more expensive than carnations or daisies) and the size of the floral pieces are the two biggest financial considerations. 

Grave opening/closing; Cemetery burial space or cremation niche; Perpetual cemetery care

These are all charges that are associated with the cost of interment or inurnment at a cemetery. These prices are set yearly by the cemetery themselves. These costs ensure that the grave, crypt, or niche is opened and that cemetery staff is available at the time of services. Charges may also include costs for the actual grave, as well as long-term care of the spaces itself. 

Monument/marker; Installation of headstone or grave marker

The charges associated with monuments and markers are paid to several people: the costs of the headstone, monument, or marker, and taxes are paid to the monument company itself. Installation fees, also known as setting fees are paid separately to the cemetery. 

Crematory costs; State or cremation permits

Like charges associated with police escorts, crematory charges may not be considered a cash advance by the funeral home, especially if the funeral home provides these services themselves. Crematory costs are the fees charged for the crematory's time, handling the cremation, and the items associated with returning the cremated remains including plastic containers, cardboard boxes, etc. 

Estimated Taxes

Many items that are considered merchandise items (caskets, urns, vaults, printing work, flowers) will have sales tax charges attached to them. The taxes are considered a cash advance because there is no telling when the sales tax levels may be raised by the state. 

Transportation expenses for death away from home.

These are cash advances that oftentimes many forget to plan for, especially if they like to travel or consider themselves a "snowbird" and move to warm weather areas during winter months.These would include the costs of having to hire an additional funeral home or transportation company in the state where the death may take place, as well as any airline fees that may be incurred. 

 Reimbursement for family members travel expenses

We encourage you to speak directly with your funeral director in terms of what they consider to be reimbursement as every funeral home would consider this differently. 

Catering for luncheon or reception; Outside facility rental

These are charges for any events that take place after the funeral services have been completed. Luncheons or receptions can be held at an event center, restaurants, or party centers. 

Cash Advance items are important to make sure they are funded ahead of time when doing a prearrangement. Even though funeral homes will not guarantee cash advance items, any money that you set aside in the prearrangement for cash advances will help to offset any differences that your family may have to pay at the time of the funeral. 

What are Cash Advance Items in a Prepaid Funeral Plan?

 

 Is everything really taken care of?

Unless you've planned a funeral before, the term "cash advance items" may not be familiar to you. But if you want to protect your loved ones from financial worries at the time of loss, you need to know what cash advance items are. Knowing what these items are can make the difference between taking care of everything for your loved ones down to the final detail or leaving loved ones with unexpected expenses at the time of loss. 

What are cash advance items?

Cash advance items are funeral-related expenses that most people expect to find in a funeral service but that aren't provided directly by a funeral home. They are called cash advance items because they require cash on hand to pay for them. While the funeral home does not directly provide these services, they do facilitate communication and coordinate with all the different vendors involved. 

Why do I need to add cash advance items to my prepaid funeral plan?

If you are planning ahead, it's important to consider adding an allowance for cash advance items or itemizing options that you know you want to provide for in your plan. If you choose not to cover cash advance items in your prepaid funeral plan, your family may be required to unexpectedly have to pay several thousand dollars out of pocket, depending on the options chosen during the arrangement meeting. 

Here are the types of items you may consider adding to your plan:

• Death certificate allowance (most families end up needing 5-10 death certificates from the county)
• Obituary and death notice fees
• Clergy honorariums
• Vocalist/musician honorariums
• Clothing
• Police escort
• Flowers
• Grave opening/closing
• Crematory costs
• Cemetery burial space or cremation niche
• Installation of headstone or grave marker
• Perpetual cemetery care
• Estimated taxes
• State or cremation permits
• Monument/marker
• Catering for luncheon or reception
• Outside facility rental
• Transportation expenses for death away from home
• Reimbursement for family member's travel expenses
• Other unforeseen expenses  

The funds you set aside today will grow along with your prepaid funeral contract in order to guard against inflation. Keep in mind, however, that funeral homes cannot guarantee cash advance items because they do not control these costs.

When you carefully consider the needs of your family and include cash advance items in your prepaid funeral plan, you can tell your loved ones with confidence, "It's all taken care of." 

If you do not choose to set aside funds for cash advance items, please make your family aware of what is and isn't covered by your prepaid funeral contract to avoid any misunderstandings at a later date. 

You can get a copy of this post by downloading or printing out the FDLIC Flyer: What are Cash Advance Items in a Prepaid Funeral Plan? located below or at any time by contacting our funeral home and speaking to our pre-arrangement director. 

Funeral Planning & Medicaid: Spend Down Rules

Making the decision to enter long-term care
at a nursing facility is not an easy decision. 
You have all the heavy emotional toll on the 
family, as well as the very high cost of care. 

 As you may know, Medicaid can be helpful in paying for long-term care, but only after your assets are reduced to below the state-mandated allowable amount or set aside as "exempt" assets. 

So, you and your family may be wondering..."How can we preserve as many assets as possible before our life savings are drained by nursing home costs?" 

Fortunately, you can set aside or "spend down" some of your assets in very specific ways to that they are excluded-and thus sheltered-from the total assets considered to qualify for Medicaid. Prepaid funeral and burial space plans for yourself and your spouse are one way to protect and preserve some of your assets. 

For this quarter's End of Life Chats articles, we are going to be explaining Funeral Planning & Medicaid from the Funeral Directors Life Insurance Company brochure-Funeral Planning & Medicaid. 

Please be aware that Medicaid rules vary greatly from state and state & constantly change. Ohio uses their own rules to establish eligibility for Medicaid and are different from the Social Security Administration's Supplemental Security Income guideline. 

Who Qualifies for Medicaid?

Eligibility tends to vary for those who qualify, but generally, seniors aged 65 or older, families living in poverty, pregnant women and disabled individuals can qualify depending on the assets held. The limit on how many assets and how much income a person is allowed are determined at the state level. If your assets are more than allowed, you will be required to either spend them down or move them into types of assets that are considered exempt before Medicaid coverage is approved. Depending on the transfer of assets, this may need to be done up to 5 years before your application is made to Medicaid, so planning ahead, if at all possible, is extremely helpful.

Non-Exempt Assets

Non-exempt assets are those that Medicaid considers as part of your accessible, countable assets when you apply for assistance. Non-exempt assets will be considered as available to you to use toward paying the cost of your care. This includes money and a variety of real and personal property which can be valued and turned into cash. These include (but are not limited to):

• Cash
• Checking and saving accounts
• CDs, stocks, bonds, or mutual funds
• Retirement accounts including IRAs, 401(k)s, 403(b)s
• Prepaid funeral contracts that are not irrevocable (can be canceled)
• Trusts (depending on how they are set up and your access to them)
• Property other than the primary residence
• Jewelry and valuable art or collections
• More than one vehicle, boats, RVs, etc.
• Cash surrender of life insurance with a face value of $1,500 or more

Exempt Assets

Exempt assets are assets that are protected, at least for the time-being, from being included in your non-exempt or countable assets. This is not an exhaustive list, but indicates the types of assets that are generally excluded. Rules will vary from state to state, but generally exempt assets include:

• Your principal residence (subject to equity limits in some states) if you, your spouse, or dependent child still live in the house, or if you intend to return to the house
• Personal property and effects, such as furnishings, belongings, appliances, and household goods. Some states place a cap on the allowable amount. 
• Life insurance with a cash value up to $1,500. Term life insurance is generally excluded as an asset.
• A designated revocable account for burial funds with a value of up to $1,500 per spouse. Other burial funds and cash surrender value from life insurance will reduce this amount.
• One wedding and engagement ring 
• An irrevocable contract for burial space items (with no limitation on the amount) for you and your immediate family members including your spouse, your children (including adoptive and stepchildren), their spouses, your siblings and their spouses, and your parents. Burial space items include caskets, urns, vaults, burial plots, cremation niches, headstones, opening and closing of the grave, and perpetual care. Burial space items are counted as separate from burial funds. 
• A larger irrevocable prearranged funeral contract for you and your spouse that includes funeral service costs such as transportation of the body, embalming, cremation, flowers, clothing, services of the funeral director and staff, etc.
• One automobile (in some cases there is a limit on the market value) for spouse or child if used to visit the person who is ill
• A married couple can keep considerably more if one spouse is still well and does not need Medicaid (in most cases, half the assets up to a certain amount)

To get a copy of the FDLIC brochure Funeral Planning & Medicaid: Spend Down Rules, you can click here. 

Developing Your Advance Care Directive

 One of the more common topics take come up when a family is discussing end-of-life items are Advance Care Directive. For those unfamiliar with Advance Care Directives, they are a series of forms that allow you to express your wishes for your health care in the event that you are unable to speak for yourself. In Ohio, the forms, which are commonly known as Health Care Power of Attorney (Health Care POA), Living Will, and some form of an Organ Donation form, allow you to name those people who you feel comfortable handling your medical care if the need arises. It is highly recommended that you speak in depth with your medical team prior to completing these documents, so you understand what rights, powers, and responsibilities those named in the document will have over your care. Once completed, it is recommend that you provide a copy of the forms to your medical team, nursing home/skilled nursing facility/hospice or other long or short care term facilities, family members and lawyer. At the bottom of this evening's post, we have provided you a link to the Cleveland Clinic Foundation's website so you may print out these forms if needed. In addition, we will be devoting several additional posts to further explaining each form of the Advance Care Directive that is acceptable for Ohio. 

What is an Advance Care Directive?

An advance care directive (ACD), also known as an advance healthcare directive (AHD), ensures that your medical wishes will be followed when you are unable to speak or are no longer in a mental state to make cogent decisions. By planning out your wishes in writing ahead of time, you provide healthcare professionals with important guidelines for medical care. The term advance care directive generally refers to two types of documents, the living will and the healthcare power of attorney, although other written and verbal instructions can fall under this category. 

The Living Will

The most common type of ACD is known as the living will. Not to be confused with a Last Will & Testament, which deals with decisions to carried out after your death, the living will is written ahead of time to explain the kinds of medical care that you wish to receive and those that you do not. It helps doctors make important decisions regarding tests, medicines, surgeries, blood transfusions, CPR and feeding tubes.

Healthcare Power of Attorney

A living will does not technically allow you to designate a person to make decisions for you. For this, you will need to turn to a healthcare power of attorney. However, these two forms can often be combined into one document. The person you choose to represent your wishes is often referred to as a health care proxy, and his or her authority will be limited to decisions of a medical nature: legal and financial decisions do no fall under his or her jurisdiction.

DNR and DNI Orders

Thought DNR (Do Not Resuscitate) and DNI (Do Not Intubate) orders may be included in the living will, they don't have to be. A DNR prevents a medic from performing CPR, and a DNI prevents the use of breathing tubes. These orders can be communicated verbally to your physician, who will put them in his or her medical records. 

 Planning Your Advance Care Directive

According to the National Institutes of Health, more than one in four Americans will have medical decisions made when they are in physical or mental state than renders them incapable of communicating their wishes. Some of these people have prepared advanced care directives, but others have not. Without an ACD, this can be a very stressful time for physicians, friends, and family members. It's never too early to start planning ahead. Here are some tips for getting started:

"Of course, at the end of the day, it's YOUR plan..."

• Consider your family's medical history: By examining the medical issues that run in your family, you can construct a good genetic map for determining potential health problems. For example, if older family members have suffered strokes, you may spend some time researching strokes to determine the kinds of decisions that would need to be made if this ever happened to you. 
• Determine your values: What is most important to you? Would you like to be kept alive by any means necessary? If so, provide clear instructions for doing so. Or are there specific issues that would reduce your quality of life so completely that you would rather not have your life prolonged artificially? If feeding tubes and breathing machines are out of the question for you, make this known, so that physicians and loved ones don't have to worry about making the wrong decision. 
• Talk to your loved ones: Once you have started to consider the medical decisions that you would like to make, bounce your ideas off the people closest to you. Ask for feedback from family members and to see what they think of your plan. Of course, at the end of the day, it's your plan, and you don't want to distort your wishes to confirm to the will of others. But it can be useful to get the opinions of people that you trust. 
• Research your state laws: As is the case with most medical issues, rules and regulations on advance care directives vary to a certain degree from state to state. Be sure to research your state laws ahead of time to ensure that all of your wishes are interpreted or documented in a way that is legally valid. A lawyer can be helpful in this area, but is not required.
• Seal the deal: Consult with your doctor and talk through your wishes to make sure they can be accommodated. Then, fill out the required forms according to your states laws to ensure your wishes will be carried out. 
• Keep it handy: Once you have completed your ACD, make sure that it is readily accessible. Provide copies for your doctor and your family members, and keep copies of it in locations where it can be easily found. It is not uncommon for people to go through the trouble of creating an ACD that cannot be located when an emergency strikes. It may be a good idea to put a copy in your wallet or your glove compartment of your car for quick and easy access.
• Reviewing your ACD: If you change your mind about any issue that has been documented in your Advance Care Directive, don't worry. You can always update it to reflect more current wishes. If you do this, just make sure that you have destroyed all previous copies to avoid future confusion.

Be Prepared

While the elderly are most in need of ACDs, people of all ages can benefit from a little preparation. Tomorrow is never promised. A sudden onset of an illness or an accident resulting in serious injury could force your family and physician to make some tough decisions. Consider taking these precautionary steps so that you can rest assured that if the occasion ever arises, your medical wishes will be followed and your healthcare team will know how to proceed. 

Developing Your Advance Care Directive was penned for funeralbasics.org, a website designed with the funeral consumer in mind to provide them with quick and accurate information. You may find a direct link to this article by clicking here.

A copy of Ohio's Advance Care Directives may be downloaded by clicking here.