When a loved one dies after having reached an advanced age, government benefits such as Social Security, Medicare, veteran’s benefits, and Medicaid are often a part of that person’s financial support structure.
An important part of the funeral planning and estate dissolution process requires that the proper government departments and officials be notified.
While in many cases this means termination of payments from those agencies, in some cases as a surviving spouse or child you may be eligible for survivors benefits and/or other services that can provide support and guidance during a difficult time.
Social Security Insurance (SSI)
As the spouse, executor, or responsible family member, it is your responsibility to make sure that the Social Security department is notified as soon as possible after the death of a benefits recipient.
In many cases the funeral director will either alert you to this requirement, or may offer to contact the appropriate agencies on your behalf.
It can take a few weeks or even months after the death is reported for the changes to be processed by the agency. If the deceased has been receiving payments or direct deposits, or if you have been receiving them on their behalf, be sure not to touch the money. You will be required to return the funds paid for any period after the death of the recipient. Just because you are continuing to receive those payments, does not mean you are entitled to them.
Although death will stop any government Social Security Insurance payments that supported your loved one during his or her life, other Social Security benefits might actually start with their death.
For example, a one-time payment is offered to the spouse or child of the deceased for funeral costs (unfortunately it is a fairly small amount, compared to the current typical costs of a funeral and burial or cremation). As a surviving spouse or child, you may also be eligible to receive monthly benefits, for example:
- Surviving spouse over the age of 60
- Surviving spouse if disabled and over the age of 50
- Surviving spouse if caring for the deceased’s disabled child, or child under 16
- Surviving children under the age of 18
- Surviving children with a disability that 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.
Note that these benefits and the amounts you may be paid will vary and may change from those listed above.
You will probably be required to show documentary proof of your eligibility for death benefits to be paid under Social Security. These will likely include:
- A copy of your birth certificate or other proof of birth
- Naturalization papers (if applicable)
- U.S. military discharge papers (if applicable)
- W-2 forms and/or self-employment tax returns for the previous year.
You can get more information from the Social Security Administration at http://www.ssa.gov.
If the deceased actively served in one of the military services during their life, they may have been receiving or their survivors may be eligible for benefits related to that service.
Veteran’s death benefits take two forms: immediate burial assistance, and longer-term pensions.
Burial assistance for example is offered for any U.S. veteran who passes away in a non-service-related situation (as well as for his or her spouse and children). The deceased may also be eligible to be buried in one of the national cemeteries or local state cemeteries. In such a case, the government will issue a headstone and the grave site, but the survivors or estate will be required to cover the costs of a funeral, body preparation, and/or cremation.
If the death occurred while the veteran was admitted to a Veteran’s Administration hospital, or if the veteran was receiving a veteran’s pension from the government at the time of their death, you may also be entitled to an amount for the funeral expenses and an additional amount for a burial plot outside of one of the VA cemeteries. Like the SSI burial benefits, these amounts are also very small compared to the actual expense of a funeral and burial, but every little bit will help defray the cost to you or the deceased’s estate.
The longer-term pensions and benefits offered through the Veteran’s Administration are fairly complicated. Depending on the situation, spouses, children, and parents of a veteran may 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
You can get more information from the Veteran’s Administration at http://www.vba.va.gov.
Medicare / Medicaid
When you notify the Social Security Administration of the deceased’s passing, that information will be provided to both Medicare and Medicaid, which means you won’t have to take any additional steps to notify those agencies.
Medicare does offer a form of death benefit, dependent on whether the doctors and other healthcare services have already been paid.
For example, if medical bills were paid in full out of the deceased’s estate or by another third party or family member, Medicare will provide a payment to the estate representative or individual who covered the costs.
The amount of payment will vary depending on the deceased’s benefits and cost of care, and rarely if ever covers it all. If medical bills are still owed, Medicare will likely send payment directly to the hospital and doctors – again rarely if ever covering the full amount owed.
Medicaid Estate Recovery
The most common issues related to MediCAID coverage to the deceased in the final years of his or her life is that Medicaid may implement an “estate recovery plan” after death occurs.
This means that you will likely not be entitled to any remaining assets of the deceased, as they will be transferred to the government as a “pay back” for some of the costs paid out by Medicaid.
In addition, if assets were gifted or distributed to you or others during the last few years of the life of the deceased, Medicaid may go after those persons to recover those assets for the government, to pay for the benefits paid out under Medicaid.
The window for this asset “claw back” varies by state, but generally has been steadily increasing in recent years. Because Medicaid is intended as assistance for low income and poor people, many recipients will qualify by distributing their property and assets to their children and heirs.
However, in order for this to be effective, distribution must be done several years BEFORE the covered individuals begins receiving benefits under Medicaid. Distribution made within the “window” is subject to “recovery” by Medicaid, from those who received it.
For information on this in the state in which the covered person resides, you will need to consult with a financial and legal professional. For people who have accumulated significant property and assets and who wish to leave as much as possible to their heirs while still providing for their own healthcare and possible long-term care before death, taking steps as early as possible to do estate planning is essential.
For elderly and long-term (nursing home) care, Medicaid works to fill the gap left when Social Security won’t cover all of the costs. For example, if your income-and-asset-qualified aunt is in a nursing home and is covered by Medicaid, her Social Security check is given directly to the nursing home. 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 (a received inheritance, a legal settlement, or her house is finally sold) your aunt’s estate will be responsible for some of the bills, and to repay Medicaid. And, as suggested above, if your aunt gave you or other family members cash gifts or real estate prior to entering the nursing home, if those gifts were given within the “claw back” window, you can expect the Medicaid department to come after you for payment.
In order to protect your loved one’s assets to the greatest extent possible, and to understand what assets or early estate distributions will be at risk for claw back by the government, consult with an estate lawyer or elder law attorney.
That said, 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 who are disabled for asset recovery (once children reach 21 however, they may be subject to estate recovery action).
- 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.
- Restrictions on whether or not Medicaid can take a home if an adult child(ren) has 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 make exceptions for situation 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 cover the costs of the estate recovery process.
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