Many times, the death of a loved one occurs when he or she has reached an advanced age—an age at which Social Security, Medicare, and Medicaid are part of the financial structure of his or her estate. As part of the funeral planning and estate dissolution process, you will need to notify the proper authorities. In some cases, you might also be eligible for benefits and other services that can provide support during this difficult time.
It is your responsibility to ensure that Social Security is notified as soon as possible after a loved one dies. In many cases, the funeral director will either alert you to this fact or offer to contact Social Security on your behalf…you will simply need to give permission and ensure that the director has the correct social security number to make the report.
It can take a few weeks or even months before the death is processed with Social Security, so if you get checks or direct deposits, be sure not to touch the money, as you will be required to give them back.
Although death necessarily stops the monthly Social Security payments that supported your loved one during his or her life, other types of Social Security benefits actually start death. For example, a one- time $255 payment is offered to the spouse or child of the deceased for funeral costs. You might also be eligible to receive monthly benefits up to half of the original Social Security amount. These funds are typically offered to:
Part of our ongoing series:
• The remaining spouse, if he or she is over age 60
• The remaining spouse, if he or she is over age 50 and disabled
• The remaining spouse, if he or she is caring for the deceased’s child under age 16 (or disabled)
• Surviving children under the age of 18
• Surviving children who have a disability (as long as it began before the age of 22)
• Parents of the deceased, if they are over 62 and were dependent on the deceased for at least half of their support
You might also be asked to show documentary proof of your need for the Social Security death benefits, up to and including:
• A copy of your birth certificate or other proof of birth
• Naturalization papers
• U.S. military discharge papers
• W-2 forms(s) and/or self-employment tax returns for previous year
For more information, visit the Social Security Administration at http://www.ssa.gov/pubs/10008.html.
Veteran benefits take on two forms: immediate burial assistance and longer-term pensions. Burial assistance is offered for any U.S. Veteran who passes away in a non-service-related situation (as well as his or her spouse and children). The deceased is eligible to be buried in one of the national
cemeteries or more local state cemeteries, depending on the location that death occurred. The government will issue a headstone and the grave site, though you must still cover the costs of the funeral, body preparation, and/or cremation.
Additionally, if the death occurred at a VA hospital, or if the veteran was on veteran’s pension at the time of death, you may also be entitled to up to $300 for the funeral expenses and an additional $300 for a burial plot outside of one of the VA cemeteries.
The longer-term pensions and benefits offered through the VA are fairly complicated. Depending on the situation, spouses, children, and parents of a veteran may be eligible for:
• Dependency Indemnity Compensation
• Death Pension
• Survivors’ and Dependents’ Educational Assistance
• Home Loan Guaranty
• Bereavement Counseling
• Specialized Vocational Training
• Life Insurance
• Financial Counseling
• Burial Benefits
• Burial Flags
For more information on these benefits and how you can access them, please visit the VA at http://www.vba.va.gov/bln/dependents/index.htm.
When you notify the Social Security Administration of the deceased’s passing, the information will be logged with both Medicare and Medicaid, which means you don’t have to take any additional steps right away.
The good news is that Medicare does offer a form of death benefits. The type of payment is dependent on whether or not the doctors and other healthcare services have already been paid. For example, if the medical bills were paid in full out of the deceased’s estate or by a third party member, then Medicare will provide a payment to the estate representative or the individual who covered the costs. (The amount of the payment will vary depending on the deceased’s benefits and cost of care—it rarely covers it all.) If the medical bills are still owed, Medicare is most likely going to channel the funds to the hospital and doctors first.
The bad news is, Medicaid isn’t quite so generous. In fact, it’s quite the opposite.
The most common issues associated with Medicaid coverage to the deceased in his or her final years of life is that Medicaid may implement an estate recovery plan after death occurs. This means that you may not be entitled to any remaining assets of the deceased, as these will become the property of the government in an attempt to “pay back” some of the costs paid out by Medicaid.
For elderly and long-term care, Medicaid works by filling in the gap left when Social Security can’t cover all the costs. For example, if your aunt is a nursing home and is covered by Medicaid, her Social Security check is given straight to the nursing home administrators. Medicaid is then billed for the rest of the cost of care, and your aunt most likely never had to pay anything out of her own pocket.
However, at the time of death, if assets are discovered (say a settlement comes through or her house is finally sold), your aunt’s estate is responsible for some of the bills.
At first glance, this might seem like an unfair practice, since the government is taking money from a deceased individual. However, Medicaid is a very, very cash-poor system, and the amount of money that is paid out to those who need it (even in situations such as the fictional aunt above) tends to run in the hundreds of thousands of dollars range. For the government to recoup just a little of these losses— at no harm to the individual now that he or she deceased—is really quite fair.
The scope of Medicaid estate recovery in your case will vary depending on the state in which you reside. However, you can expect that any assets that go through probate (as in, not to a spouse) to be tied up for awhile, and possibly subject to complete Medicaid estate recovery. Some states are more aggressive than others, and items bequeathed directly to a beneficiary through a will may also be subject.
In order to protect your loved one’s assets and understand Medicaid estate recovery more clearly, talk with an estate lawyer or elder law attorney. You do have rights, and there are stipulations regarding just what Medicaid can legally do, including:
• Not going after the surviving spouse for money or asset recovery (while he or she is alive)
• Not going after children under the age of 21 or who are disabled for asset recovery (once children reach 21, however, they may be subject to estate recovery)
• Restrictions on whether or not Medicaid can take a home if a sibling with equity interest in the property has lived there for at least one year prior to the deceased’s institutionalization. (Similar situations occur for adult children who have lived at the property for at least two years, with or
without equity interest, and who helped care for the aged parent.)
Some states will also make exceptions for situations in which asset recovery will cause undue hardship for the family survivors, or when the total sum of the recovered money will not be enough to undergo the whole process of estate recovery.
Our next post in this series will be released on Tuesday February 1, 2011 and will be about what to do with a loved one’s stocks and investments when they die.