PM 07-02-08-b
Reduce the $1,500 exempt burial fund limit by the face value of non-exempt life insurance for which cash value has been disregarded (face value $1,500 or less), and the amount of any funds in an irrevocable trust or other funeral and burial agreement. For example, a person with a $1,000 life insurance policy can exempt up to $500 in a revocable prepaid burial fund in addition to the resource limit amount.
After reducing the $1,500 prepaid burial limit by the face value of disregarded non-exempt life insurance, determine if the person has excess resources. If applying the nonexempt amount of the burial fund does result in excess resources, refigure the person's countable resources by counting the cash value of the life insurance as a nonexempt resource. Apply the cash value to the resource limit. Do not reduce the $1,500 prepaid burial limit.
Example: A person owns the following resources:
Non-exempt life insurance with $1,000 face value, $1000 cash value; and
$25,000 revocable prepaid burial plan: ($15,000 designated for burial space); and
$1,000 savings account.
1st Calculation
Reduce the $1,500 prepaid burial limit for a revocable plan by the $1,000 face value of the life insurance ($1,500 - $1,000 = $500 exempt prepaid burial limit).
Subtract the reduced prepaid burial limit from the nonexempt portion of the prepaid burial plan: ($2,000 - $500 = $1,500). Apply the nonexempt prepaid ($1,500), plus the $1,000 savings account to the $17,500 resource limit ($1,500 + $1,000 = $2,500 - $,2000 = $500 in excess resources). Since this calculation results in a spenddown, make a 2nd calculation as follows.
2nd Calculation
Do not reduce the $1,500 prepaid burial limit. Subtract the $1,500 limit from the $2,000 nonexempt portion of the prepaid burial plan ($2,000 - $1,500 = $500). Apply the remaining $500 of the prepaid burial plus the cash value of the life insurance ($500) plus the savings account ($1,000) to the resource limit. Nonexempt resources are $2,000 ($500 + $500 + $1,000). The case is eligible without a spenddown.
Use the 2nd calculation, which benefits the customer. If both calculations result in spenddown, use the calculation that benefits the customer the most.
