Medicaid Spend-Down: How To Buy Irrevocable Burial Reserve

Certified as an elder law attorney by the National Elder Law Foundation under authorization of the Pennsylvania Supreme Court

Certified as an elder law attorney by the National Elder Law Foundation under authorization of the Pennsylvania Supreme Court

Many, perhaps most, Medicaid applicants buy an irrevocable burial reserve when spending down to qualify for long-term care Medicaid benefits.

As with most Medicaid qualification strategies, there is a right way and a wrong way to do it.

This post will address some of the most common errors people make using this strategy in Pennsylvania, where I practice, and will explain the correct way to buy a reserve.


An irrevocable burial reserve is an exempt resource, meaning it won’t be counted as a resource that needs to be spent down. Buying exempt resources is an effective way to qualify for Medicaid benefits.

I usually recommend purchasing a reserve in the maximum amount allowable under Pennsylvania Medicaid provisions.

Under Pennsylvania provisions, a Medicaid applicant’s reserve will be exempt if its value does not exceed an allowable limit. That limit is 125% of the average burial cost in the county where the applicant resides, as tracked and calculated by the Commonwealth.

Current 2017 limits as of this writing for the Pittsburgh region are (by county):

  • Allegheny: $11,836.25
  • Westmoreland: $12,250
  • Washington: $16,625
  • Butler: $15,062.50
  • Beaver: $15,625
  • Fayette: $12,970
  • Indiana: $12,000
  • Armstrong: $12,187.50
  • Lawrence: $12,375

So a Medicaid applicant at a Beaver County facility could purchase an exempt reserve of up to $15,625 in value, while an applicant in Pittsburgh (Allegheny County) could place only $11,836.25 into a reserve that would remain exempt.

Beneficiary designation

Make sure to make a beneficiary designation for any unused funds to one or more persons, such as family members, instead of to the estate of the Medicaid applicant. The reason is that the Department of Human Services tracks its expenditures for every Medicaid recipient and makes a claim to collect reimbursement after the recipient dies.

Under Pennsylvania regulations, “[a]ssets placed in trust prior to the death of the [Medicaid recipient], including irrevocable burial reserves, are not subject to Department’s claim if the assets are not payable to the [recipient’s] estate.” 55 Pa. Code § 258.3(d). By making the estate the beneficiary, you make any excess funds subject to the Department’s claim, but by making it payable to a person, you avoid that loss.


Advance planning usually yields the best results in estate or Medicaid planning. But the buying of a burial reserve is often an exception to the rule.

Especially in the case of a married couple, buying reserves too soon can actually cost the applicant’s spouse because it reduces funds used to determine the community spouse resource allowance. The best time for a married couple to buy reserves is after date of admission to a nursing facility.

In the case of a single or widowed person, waiting until after date of admission allows the applicant to determine exactly how much should go to a burial reserve as opposed to being used for some other purpose, such as making other exempt purchases or making exempt transfers of funds.

The Department of Human Services increases the allowable purchase amounts about once a year, so by waiting you may also increase the amount you can place in the reserve.

Finally, the Department will give retroactive effect of the purchase of an irrevocable burial reserve up to 30 days. So even if you wait until after date of admission to buy the reserve, acting within the 30-day window can still mean qualification for benefits at the earliest possible date.

Putting it all together

By determining the proper amount of the reserve, knowing how to set up the contract the right way, and timing it smartly, you can get the maximum benefit from buying irrevocable burial reserves.

This purchase is often a key part of an effective Medicaid spend-down strategy.

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