Paying for your funeral with your HSA. Why not?


Last December I was welcomed into the world of Medicare.  Prior to that I had either had my health insurance paid for by the business I was working for or, since I sold our funeral home, paid for it out of my own pocket on an individual plan basis.  Quite frankly, Medicare and its supplemental coverages are less costly for me than an individual policy was and I was looking forward to putting the savings into my pocket.


It’s worked out pretty well in that regard although I’ve now learned most of the acronyms that come with Medicare and one that you need to learn about prior to a couple of years before going on the government plan is IRMAA (Income Related Monthly Adjusted Amount).  Had I know that acronym, and with a little planning, I probably could be saving a couple of hundred dollars per month. . . but that’s another story for another time.


Suffice it to say, that when I see something financial about Medicare I now take a look.  And, with my Funeral Director Daily work, if the article has the world “funeral” in it, well, then I really take a look.  That will explain why I read this article from Health News entitled, “Does Medicare pay for funeral expenses?”.


The simple answer is “No”, however the article does mention the “Role of Medicare in funeral coverage” and mentions the $255 Social Security one-time lump-sum payment.  The article continues, however, and mentions that some “Medicare Medical Savings Accounts” (MSA) may play a role at times.


Here’s what the article says about MSA’s and death expenses:

“A Medicare MSA is a Medicare Advantage Plan that deposits money into a savings account to cover healthcare costs. If the remaining funds are in the MSA at the time of a beneficiary’s death, survivors could use these to offset funeral expenses. Thus, This account serves a dual purpose, providing support for healthcare expenses during life and end-of-life costs.”


Funeral Director Daily:  Now, when you hit the new world of Medicare and its rules it may be that a “Medicare Advantage Plan” is not for you or maybe your situation does not qualify for one.  However, just reading that made me wonder about the possibility of Health Savings Accounts (HSA) being used to pay for funeral expenses.


Tom Anderson
Funeral Director Daily

Today, according to this article from the HSA Store, “Funeral Expenses are not eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), health reimbursement arrangement (HRA), limited-purpose flexible spending account (LPFSA) or a dependent care flexible spending account (DCFSA).”


And, this is just a thought from me and kind of an insight to how my mind works, but I’m wondering that since there is a somewhat MSA precedent – that of paying out the balance for funeral costs – is there work our people at NFDA (National Funeral Directors Association) could do to make HSA’s have some impact on funeral expenses?  I’m also aware of the difficulty in changing government regulations in our current political environment, especially those that may benefit businesses.  But, I think it would not only be beneficial to funeral homes and preneed companies, but to the American consumer as well.


My wife and I have contributed over the years to our HSA’s.  We’ve also had the good fortune to be healthy so we have built up good balances in the accounts.  Once on Medicare we can no longer contribute to these but we can use them to pay off deductibles and Medicare supplement premiums so there is a way to spend such.


However, I’m wondering if there are a lot of consumers like us. . . . those that have balances in their HSA accounts upon entering their Medicare years.  Wouldn’t it be nice for those consumers if they could use some part of those balances to establish a preneed funeral fund with their local funeral home and know that expense is taken care of?


It’s just a thought that I had and maybe our NFDA group has thought about it and worked on it, but if not it certainly would be a benefit that consumers may think about using. . . . and, at the same time benefit the preneed community and funeral providers.


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