● Many insurance companies will not pay full benefits, or anything at all, during the first few years premiums are being paid. ● Money spent may not cover future funeral costs, which could result in the use of cheaper merchandise or requests for additional money. ● Survivors may not be aware that funeral costs have been paid and may pay at a different funeral home. ● If the person dies out of town and the family employs another funeral home, it may be difficult to get a refund. ● By the time of death, the funeral home may have a poor reputation or be out of business. ● Laws in many states do not offer much protection for prepaid funeral money. Only New York and New Jersey have somewhat consumer-friendly preneed laws. New York requires 100 percent of the money be deposited in trust. ● The consumer has the right to a full refund, with interest, on a revocable plan. Irrevocable plans are transferable, although many individuals and families do not understand their rights. ● The money may not be secured in a federally insured bank and may be under the control of the seller. ● Funeral insurance plans are not tightly regulated, and the plan may not provide a full refund with little or no penalty if cancelled. ● If the trust or insurance policy is transferable to another funeral establishment, the new funeral home is not obligated to honor the prices of the original funeral home. (Funeral Consumers Alliance, n.d.) The FCA promotes alternatives such as preplanning arrangements without prepaying or establishing a pay-on-death account (POD) to set money aside for funeral expenses without Medicaid Medicaid applicants must typically have only $2,000 available to them, although this may vary among states. Seniors applying for Medicaid may need to spend down their assets to qualify. Only prepaid, irrevocable preneed funeral contracts are allowed to be used for this purpose, so Medicaid planners, nursing home advisors, and social service and healthcare advisors often encourage senior citizens to use preneed contracts as a spend- down device. In this case, the customer would prepay a lump sum to transfer all assets but would not be able to access the money. According to a Medicaid fact sheet, burial funds are set aside and clearly designated for an individual’s or spouse’s burial, cremation, or other burial-related expenses (Centers for Medicare & Medicaid Services [CMS], 2015). If managed correctly, these funds will not be counted as assets when qualifying for Medicaid. Funds must be kept separate, for example, in an account at a financial institution that is designated and labeled for this purpose. The limit on the amount of these burial fund accounts is $1,500. These accounts are revocable, so they can be accessed if needed. It should be noted that proceeds from a life insurance–funded burial contract would be counted toward this limit on burial funds.
handing it over to a funeral firm. POD accounts deposit funds in a bank to cover current funeral costs, and interest accrues to cover any increases due to inflation. The account can be made payable upon death to a trusted family member or friend who will use the money properly for the funeral, and funds are released immediately after death without the delay of probate. POD bank accounts are FDIC-insured, they remain in the purchaser’s name, and the money can be withdrawn at any time. Medicaid counts these accounts as assets, and the interest is subject to income tax (FCA, 2015). The Federal Trade Commission (FTC) Funeral Rule addresses preneed contracts as well. The following is a brief summary from its website (FTC, 2015): Under the Federal Trade Commission’s (FTC) Funeral Rule, consumers have the right to get a general price list from a funeral provider when they ask about funeral arrangements. They also have the right to choose the funeral goods and services they want, and funeral providers must state this on the general price list (GPL). If state or local law requires purchase of any particular item, the funeral provider must disclose it on the price list, with a reference to the specific law. The funeral provider may not refuse, or charge a fee, to handle a casket bought elsewhere, and a provider offering cremations must make alternative containers available. The FTC conducts undercover inspections every year to make sure that funeral homes are complying with the agency’s Funeral Rule. The Funeral Rule applies anytime a consumer seeks information from a funeral provider, whether the consumer is asking about preneed or at need arrangements. Because states’ preneed regulations are not uniform, they may or may not address specific issues of concern to the consumer. It is important to know state regulations regarding funerals, embalming, preneed contracts, and Medicaid, since each state has its own limit as to how much a person can put into a preneed account for Medicaid spend-down purposes. There are often state rules specifying that money left after a funeral paid for by a preneed account must be returned to the state, not kept by the funeral home or given to beneficiaries. Penalties for businesses found in violation usually require violators to take training, undergo additional testing, and pay fines. States use different agencies to regulate state policy. While states such as New York and Connecticut have strong laws covering many aspects of the preneed process, other states have weak laws. There is no reliable guide to current laws, so consumers have to research each state’s statutes individually. This fact underscores the need for an attorney or financial planner to review a preneed contract and for a funeral director to thoroughly know state rules as well as how to research the rules of another state if a customer dies there.
NATURAL OR “GREEN” FUNERALS
burial markers; and certified natural or green burial grounds (NFDA, 2016). Another trend is natural burial, which does not include any embalming. All parts of the funeral, including the clothing and casket, must be made of materials that are nontoxic and biodegradable. Grave markers must also be naturally occurring and environmentally conscious, so rocks, trees, or flowers may be used as markers rather than the traditional granite or quartz.
According to the NFDA, green funerals incorporate environmentally friendly options in order to meet the needs of a family requesting a green service. A green funeral may include any or all of the following: A small gathering in a natural setting; use of recycled paper products only; locally grown organic flowers; carpooling; organic food; no embalming or embalming with formaldehyde-free products; the use of sustainable and/or biodegradable clothing, shrouds, or caskets; naturally occurring Natural burials More cemeteries and funeral homes, especially those in the U.S. Pacific Northwest, are providing natural burials, and the demand is likely to continue to grow. The movement away
from traditional funerals and burials is partly because they are resource intensive. Traditional burials and funerals require many materials, and those materials use an extensive amount
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