The acronym is IBR, Irrevocable Burial Reserve. An IBR is a fund that you set up with a life insurance company that is specially designated for the person’s burial costs. The amount you can put into this varies County by County in Pennsylvania. Generally speaking the allowable amount is $15,000 – $20,000. The County value you may use is the value allowable in the County where the Nursing home is regardless of where the Nursing Home Resident resides.
This is a Special Life Insurance Policy. You can get it through the Funeral Home or, through an organization like Consumers Choice or Catholic Cemeteries. If you use the funeral home, they will sell you the policy. If you are not sure about which funeral home you wish to use, Consumers Choice will sell you a policy that can be used at any funeral home.
If you put $18,000 into a IBR policy, that does not mean that you must have a $18,000 funeral. It is designed to be for all costs, the Funeral Home, Internment, the Repast or Wake, Florist, etc. If there is any money remaining at the end, can the family keep the balance? That depends on how the beneficiary form is completed.
Generally speaking, the primary beneficiary is a funeral home up to the amount agreed to for funeral expenses. Who the remainder beneficiary is depends on how you complete the form. If there is no remainder beneficiary listed, then the Estate of the deceased Medicaid recipient is paid the remainder amount. You may then have to open a Probate estate to pay the additional amounts for the wake, florist, etc. The balance will then be payable to the Commonwealth of Pennsylvania in what is known as Estate Recovery. If the remainder beneficiary is a living human being (not the Estate) then that person or persons are paid the remaining amount with no claims by the Commonwealth of Pa. That person or persons can then pay for the wake, florist etc, and keep the balance.
Timing is critical. A person is not eligible for Medicaid until their asset limits is at or below the allowed amount ($8,000 or $2,400). You must pay the nursing home bill until you have spent down. However there is one major exception to this rule. The IBR will be retroactively applied.
This is best explained by example. Say Barb is in a nursing home, she is allowed to keep $8,000 and has $20,000 in the bank in October. She paid the nursing home through June and applied for Medicaid. She owes $22,000 for August and September. Barb should get a denial because she has $12,000 too much. She can spent that excess $12,000 in October and they will treat it as if it came out on the first date of Medicaid need, July 1 in this example and she will be eligible. If Barb pays that excess amount in October on other items, like taxes, debts, or something else, she still owes the nursing home $22,000. Other items outside of medical bills, nursing home bills and the IBR are not retroactively deducted from available resources (her bank account).
What is Barb said “I already have a Life Insurance Policy to cover the funeral.” If it is not Irrevocable and for the funeral, the cash value will be considered a resource and count towards your resource limit of $2,400 or $8,000. If it is a term or group policy, it will not be considered a resource because it has no cash value. Since she had excess resources, she should apply that amount towards an IBR and use the term or group policy to benefit her loved ones.
Senior Care Resources provides expert guidance and assistance with Medicaid Applications for Long Term Care in western Pennsylvania.