In New York, an irrevocable pre-need funeral agreement is not counted as a Medicaid resource, and it can be for any amount. A separate burial fund for someone subject to the resource test is exempt only up to $1,500 ($3,000 for a couple), and it must be kept apart from other money.
The distinction matters because many people talk about a “burial account” as one thing. Under New York’s rules it is three different things: a funeral agreement, a small burial fund and burial space items such as a plot. The newest state documents on this topic date from 2010 and 2011, so this page explains them and tells you where to confirm the numbers.
How does New York Medicaid treat a burial account?
The state Department of Health (DOH) Medicaid Reference Guide and a 2011 directive set the rules for applicants who are aged, blind or disabled (called “SSI-related”). Here is how each kind of burial money is treated.
| Type of burial money | Limit | Counted toward the resource limit? |
|---|---|---|
| Irrevocable pre-need funeral agreement | Any amount, at fair market value | No |
| Supplemental burial fund | $1,500 per person, $3,000 for a couple | No, up to the limit. Excess counts |
| Burial space items paid in full (plot, casket, vault, urn, headstone) | No dollar limit stated | No, including appreciation in value |
| Interest earned on a burial fund | No limit | No |
| Court-ordered burial fund | Any amount | No |
An exempt burial fund must be separately identifiable. DOH states that funds set aside for burial cannot be mixed with non-burial money, and when they are combined, the burial funds are not exempt. The DOH guide on burial funds has the full text.
Who has to worry about the $1,500 limit?
It applies to Medicaid applicants and recipients who face a resource test, which for long-term care means people who are 65 or older, blind or disabled. DOH’s chart for 2026 lists the resource levels for that group, and it shows that some groups have no resource test at all.
| 2026 figure (effective 1 January 2026) | One person | Couple |
|---|---|---|
| Resource level, aged, blind and disabled Medicaid | $32,396 | $43,781 |
| Supplemental burial fund (state policy) | $1,500 | $3,000 |
| Community spouse resource allowance, minimum / maximum | $74,820 / $162,660 | |
The resource levels and spousal allowances come from DOH’s 2026 income and resource standards chart. The $1,500 figures come from the burial policy documents, which the 2026 chart does not repeat, so ask your Medicaid office to confirm them. For how resource limits and spending down work together, see our Medicaid spend-down guide.
What is an irrevocable pre-need funeral agreement?
Since 1 January 1997, a Medicaid applicant may (per DOH’s guide on pre-need funeral agreements) buy a single irrevocable pre-need funeral agreement for any amount. The money is held in trust, cannot be refunded to you, and must be used only for funeral and burial costs. Because it is not available to you, DOH does not count it as a resource. Paying fair market value for the goods and services is not a penalized transfer.
New York law requires the agreement to carry a disclosure statement, and the local district reviews it. In plain terms, the statement says the agreement is irrevocable for Medicaid and SSI applicants and recipients, the money may be used only for funeral and burial expenses, any money left over goes to the county, and you may change funeral homes at any time. DOH’s 2011 directive says the district checks the date of the agreement and this language.
- Choose a provider. The agreement can be made with a funeral firm, funeral director, undertaker, cemetery or another business that is allowed to create such agreements.
- Itemize the services. Get an itemized statement of goods and services, because a nursing home Medicaid application may require it to be reviewed.
- Pay fair market value for what is listed.
- Confirm the disclosure language is in the contract.
- Give a copy to your Medicaid office (HRA in New York City) and keep your own copy.
Does a burial trust affect the Medicaid look-back?
For nursing home Medicaid, the district reviews the itemized statement to see whether a transfer of assets happened in the 60-month look-back. Paying a funeral director fair market value for customary items is not an uncompensated transfer. Some things can be treated as one.
| Item in or around the agreement | How DOH treats it |
|---|---|
| Customary services and burial space items at fair market value (hearse, out-of-town shipping, death notices, flowers, casket, grave opening and closing, headstone) | Not an uncompensated transfer |
| Food, lodging or transportation for family, friends or guests | Treated as an uncompensated transfer if the agreement was bought during the look-back |
| A second irrevocable agreement for the same person | May be treated as an uncompensated transfer |
| Agreement made in another state | Does not need to be converted and is disregarded |
What about burial plots, caskets and family members?
Burial space items are exempt. DOH’s definition covers grave sites, crypts, vaults, mausoleums, caskets, urns, opening and closing the grave, perpetual care and headstones. Items bought and paid in full before the funeral agreement can stay outside it, and they are exempt along with any rise in value. Installment contracts are different: until they are paid in full they do not count as a burial space, though the equity can go toward a burial fund.
Burial space items for immediate family members are exempt too. DOH defines this as a spouse, minor and adult children, stepchildren, brothers, sisters, parents and the spouses of those people, and they do not need to live with you or depend on you. Funeral agreements bought with your money for a family member on or after 1 January 2011 must be irrevocable. Spending down excess resources to get coverage back to the application month can be done through an agreement for you or your spouse, but not for other family members.
What happens to money left in the agreement?
If money is left over after funeral and burial expenses, DOH’s directive says it must be paid to the social services official responsible for indigent burials where the person lived. It does not go back to the family.
What does a life insurance policy do to the burial fund?
DOH counts life insurance first. If the combined face value of your policies is $1,500 or less, that amount is applied to the burial fund and the policies are excludable. If the face value is higher, the cash value is countable, and you may designate it as a burial fund with a written statement that it is meant for burial. Only $1,500 of that is exempt. Ask your Medicaid office to apply this to your specific policies.
What if you are over the resource limit?
DOH tells districts that an SSI-related applicant with excess resources is given 10 days to reduce them by setting up an irrevocable agreement or a burial fund, and the period can be extended. Planning ahead is easier than doing it in a crisis. If you manage a parent’s money, read our guide on power of attorney and guardianship first, and for disabled adults, see pooled income trusts.
ProLife Home Care is a licensed home care agency serving Brooklyn and Queens (New York State DOH licence #2572L001). We are not a law firm or a funeral home, so we cannot set up these agreements. If you are planning for care at home alongside Medicaid, call (718) 232-2777 or use our contact page. You can also read about how Medicaid covers home care in New York.
Medicaid rules change and the burial policy documents are older than most guidance. Everything above was checked on 9 October 2026 against the DOH Medicaid Reference Guide pages on burial funds, pre-need funeral agreements and burial spaces, administrative directive 11 OHIP/ADM-4 (July 2011) and DOH’s 2026 resource standards chart. This is general information, not legal advice. Confirm your own situation with HRA or an elder law attorney.
Frequently asked questions
What is the Medicaid burial fund limit in New York?
For aged, blind and disabled applicants, a separate exempt burial fund can hold up to $1,500, or $3,000 for a couple. An irrevocable pre-need funeral agreement has no dollar limit when bought at fair market value.
Can I have both a burial plot and a burial fund?
Yes. Burial space items such as a plot, casket or headstone are exempt, and so is a supplemental burial fund up to the limit, as long as the fund is kept separate and the funeral agreement does not already use up the $1,500.
Can I take the money back out of an irrevocable funeral agreement?
No. The money is held in trust and cannot be refunded to you. You can change your choice of funeral home at any time.
What happens to leftover money in the agreement?
It goes to the social services official responsible for indigent burials in the district where the person lived, not to the family.
Is the interest on a burial fund counted?
No. DOH says accumulated interest on burial funds is disregarded, whether or not the fund is exempt.
Does a funeral agreement cause a Medicaid penalty?
Not if you pay fair market value for customary items. Paying for guests’ food, lodging or travel inside the agreement during the look-back, or buying a second agreement for the same person, can be treated as an uncompensated transfer.
Can I buy a funeral agreement for my spouse or child?
Yes. Agreements bought with your money for a family member on or after 1 January 2011 must be irrevocable to be disregarded, and burial space items for immediate family members are exempt.
