What Does Not Count Against a Spend-Down
Section 1
Burial Space and Accessories
No dollar limit, and nothing has to be locked in
Cemetery property is left out when Medicaid adds up what a client owns. There is no limit on how much, and nothing has to be made irrevocable to get it. Your client buys the property and it simply is not counted.
This gets missed constantly, mostly because the list of what counts as cemetery property is much longer than people assume.
Authority: WAC 182-512-0500(8)
- Conventional gravesitesSubsection (8)(a)
- Crypts, niches, and mausoleumsSubsection (8)(b)
- Urns, caskets, and other repositories customarily used for remainsSubsection (8)(c)
- Vaults and burial containersSubsection (8)(d)(i), as a necessary and reasonable improvement
- Headstones, markers, and plaquesSubsection (8)(d)(ii)
- Arrangements for the opening and closing of the gravesiteSubsection (8)(d)(iii)
- Contracts for care and maintenance of the gravesiteSubsection (8)(d)(iv). This covers the endowment care fund required on every cemetery property sale in Washington
- A burial space purchase agreement, fully or partially paid, plus accrued interestSubsection (8)(e). A partially paid agreement qualifies
Put that next to an actual cemetery quote and it covers nearly every line on it: the space, the niche or crypt, the urn or casket, the vault, the marker, the interment, and the care fund.
Section 2
Whose Burial Space Qualifies
Wider than almost anyone expects
This does not only cover your client. They can also buy cemetery property for close family, and that is left out of the total too. Close family means:
- Spouse
- Parents and adoptive parents
- Minor and adult children, including adoptive children and stepchildren
- Siblings, including adoptive siblings and stepsiblings
- The spouses of any of the above
No dependency or residency requirement
The rule says outright that none of these people have to depend on your client financially or live with them.
What that means in practice: a client over the limit can buy cemetery property for a spouse, both parents, every child and stepchild, every sibling, and each of their spouses, and none of it counts. In a large family that adds up quickly, and most families never find out they had that option.
Authority: WAC 182-512-0500(9)
Section 3
Money Set Aside for the Funeral
Why locking it in changes everything
Cemetery property is the easy part. Money set aside for the funeral itself is treated very differently depending on one thing: whether your client keeps the right to take it back.
Keeps the right to take it back: only $1,500 is protected. Gives up that right: the whole amount is protected, with no cap. That single choice is the whole rule.
| Revocable | Irrevocable | |
|---|---|---|
| Authority | 182-512-0500(2) |
182-512-0500(4) |
| Limit | $1,500 each for the client and their spouse | No dollar cap |
| Test applied | Has to be set aside only for burial or cremation costs | Has to be a sensible amount for an actual funeral |
| Reductions | That $1,500 shrinks further if the client holds cash-value life insurance, or already has money locked in elsewhere | Not applicable |
| Growth | Interest and growth stay protected if left in the fund | Stays inside the trust or policy |
Two ways this goes wrong
Mixing the money. If burial funds get pooled back in with ordinary savings, they stop being protected. Keeping them separate is not a formality.
Spending it on something else. If protected burial money gets used for anything other than burial, it gets added back in, and whatever is over the limit is treated as income in the month it was spent.
Authority: WAC 182-512-0500(2) through (7)
Section 4
Making an Arrangement Irrevocable
Two ways to fund it, and they do not lock in at the same speed
We fund plans two ways: an insurance policy through Global Atlantic, or a trust through ClearPoint. Locking the money in works differently in each, and the difference matters a great deal if an application is already moving.
| Global Atlantic / Forethought | ClearPoint | |
|---|---|---|
| Vehicle | Pre-need life insurance policy or annuity | Prearrangement funeral service contract funded through trust |
| Mechanism | The client signs the policy over permanently. It goes to us and then straight into the Forethought Trust. They give up the right to cash it in or borrow against it | The client signs an Irrevocable Option box, giving up the right to cancel the contract or get a refund |
| Authority cited | Contractual, on the carrier's preneed options form. Insurance-funded contracts are governed by RCW 18.39.255 |
RCW 18.39.250(11)(a), referencing public assistance as defined at RCW 74.04.005 |
| When effective | 90 days after the policy issue date, unless the free look provision is waived | On signing |
| Excess proceeds | Designated to the insured's estate after delivery of all goods and services; the right to change that beneficiary is waived permanently. Note RCW 18.39.255(4): insurance-funded prearrangement contracts must disclose that funds not used for services may be subject to a state claim for reimbursement of long-term care services, with recoupment under RCW 18.39.250(11)(b) |
Contract designates a person to receive excess. RCW 18.39.250(11)(b) requires DSHS to notify the trustee of any prearrangement trust where it has an estate claim for long-term care services, renewed at least every three years |
| Ongoing obligation | If the policy is on a payment plan, the owner keeps paying premiums after the assignment. A policy paid in full up front has nothing further to pay | Payment schedule continues per the contract |
| Funeral home not locked in | The right to change the designated funeral firm remains with the owner | Firm may be changed; relocation out of state may require a new trust contract |
The 90 day point deserves emphasis
If a client is at or near an application date, the insurance route does not actually lock in for 90 days after the policy is issued, unless the free look period is waived. The trust route locks in the moment it is signed.
If timing is tight, tell us at the outset and we will structure toward the vehicle that meets the date.
An existing plan can usually still be locked in
Irrevocability is an elective, not a default. RCW 18.39.250(11)(a) expressly contemplates later conversion: where a beneficiary becomes eligible or seeks to become eligible for public assistance after the contract is entered into, the contract may provide for an election to make the trust irrevocable thereafter. Whether that election exists depends on the contract terms, and the conversion is processed through the funeral home the arrangement was originally written with. If your client planned elsewhere, that firm handles it.
This matters because most clients who need this are not planning fresh. They planned years ago and are only now facing a spend-down.
Section 5
Working With Us
What we can put in your file, and where we stop
- An itemized statement of goods and servicesPriced line by line, so the amount set aside can be shown to be a sensible figure for a real funeral
- The signed lock-in paperworkWhichever form applies, with copies for your file
- A separate cemetery contractSpace, interment, vault, marker, and care fund, kept separate from the funeral paperwork so the cemetery side is documented on its own
- Appointments at the bedside or in facilityWe meet clients in skilled nursing, assisted living, hospice, or at home
- One person on itSame contact for the funeral home and the cemetery, rather than two firms and two files
What we do not do
We do not advise on eligibility, we do not touch applications, and we will not tell anyone whether a plan will be approved. That is your work and we stay out of it. What we give you is accurate paperwork showing exactly what was arranged and what it cost, on your timeline.
Direct line
If you have a client with a spend-down underway, call before you need the paperwork. It is far easier to set up correctly at the start than to fix at the deadline.
Martice Morrison
Family Service and Advanced Planning Director
206-277-5417 · mmorrison@bonneywatson.com
Bonney Watson · Washington Memorial Park · 16445 International Blvd, SeaTac, WA 98188
Sources
Every citation on this page links to the official text. Full addresses are listed here so a printed copy is still usable.
- WAC 182-512-0500 — Burial funds, contracts and spaces excluded as resourceshttps://app.leg.wa.gov/wac/default.aspx?cite=182-512-0500
- WAC 182-512-0450 — Life insurance treated as a resourcehttps://app.leg.wa.gov/wac/default.aspx?cite=182-512-0450
- RCW 18.39.250 — Prearrangement contracts, trusts, refunds (irrevocable election at (11)(a); DSHS estate claim at (11)(b))https://app.leg.wa.gov/rcw/default.aspx?cite=18.39.250
- RCW 18.39.255 — Insurance-funded prearrangement contracts, required disclosureshttps://app.leg.wa.gov/rcw/default.aspx?cite=18.39.255
- RCW 74.04.005 — Definition of public assistancehttps://app.leg.wa.gov/rcw/default.aspx?cite=74.04.005
- RCW 68.40.010 — Endowment care fund minimum deposithttps://app.leg.wa.gov/rcw/default.aspx?cite=68.40.010
- RCW 68.44.020 — Endowment care principal remains inviolablehttps://app.leg.wa.gov/rcw/default.aspx?cite=68.44.020
This summary is provided for professional reference and reflects our reading of the cited authorities as of the date shown. It is not legal, tax, or benefits advice, and it is not a substitute for review of the current rule text or for independent professional judgment. Rules and carrier forms change. Bonney Watson does not determine Medicaid eligibility. Verify all citations against the current WAC and RCW before relying on them.
