How Much Does SSI Pay for Funeral Expenses? SSI Burial Fund Rules

Does SSI pay death benefits for burial?

No. Supplemental Security Income (SSI) is a monthly payment for people with low income and few resources who are 65 or older, blind or disabled. It stops at death. It has no funeral, burial or cremation payment.

People often mix up SSI and Social Security. Social Security has a one-time $255 death payment for an eligible spouse or child. That payment is based on the work record of the person who died. It is not an SSI benefit. See Social Security death and funeral benefits.

SSI helps in a different way. It has an asset limit, called the resource limit, of $2,000 for one person and $3,000 for a couple. Money and items set aside for burial can be left out of that count, within limits. That lets people on SSI plan their funeral without losing their check.

The SSI burial fund: up to $1,500 each

Up to $1,500 set aside for your burial, and up to $1,500 for your spouse's, can be excluded from SSI resources. Burial funds can be:

• Cash, or a bank account set aside for burial.
• A revocable prepaid burial contract or burial trust.
• Other burial arrangements, including payments on an installment contract for burial spaces.
• Other financial items with a set cash value.

The money can only be for the burial of you or your spouse. It cannot be set aside for a child or other relative under this rule.

How to set up SSI burial funds the right way

Two rules decide whether your burial fund counts:

1. Mark it clearly. The fund must be clearly set aside for burial. This can be shown in the account name, in a signed statement to Social Security, or on a Social Security form.
2. Keep it separate. Do not mix burial money with money for living costs. If you do, none of it gets the exclusion. Burial funds and burial spaces can be kept together, though.

One approach many people use: open a separate savings account titled for burial, put only burial money in it, and tell Social Security about it. Ask your local office how they want it documented.

What reduces the $1,500 limit

The $1,500 is the upper limit you can exclude. It goes down if you already have other burial money covered in other ways:

• Small life insurance. If your life insurance is excluded because its total face value is $1,500 or less, that face value is subtracted from your $1,500.
• Irrevocable burial funds. Money in an irrevocable burial trust or contract that pays for funeral services is subtracted.

The part of a contract that buys burial spaces, like a plot or casket, does not reduce the $1,500.

Example: how the $1,500 is figured

Example (hypothetical round numbers, not real data): Ruth gets SSI. She owns a small whole life insurance policy with a face value of $1,000. Because its face value is under $1,500, its cash value does not count against her.

• Start with the $1,500 burial funds limit.
• Subtract the $1,000 face value of her excluded life insurance.
• That leaves $500 she can set aside in a separate burial account.
• She also prepays a cemetery plot and headstone. Those are burial spaces, so they do not count and do not reduce her limit.

If Ruth later earns $20 of interest in her burial account and leaves it there, the interest does not count either.

Burial spaces are not counted, at any value

Burial spaces are separate from the $1,500 burial fund. They are excluded regardless of value. Burial spaces include:

• A burial plot, grave site, crypt or mausoleum
• A casket, urn, niche or other container
• A vault or grave liner, headstone or marker
• Opening and closing of the grave, and perpetual care

You can exclude burial spaces for yourself, your spouse and your immediate family. Immediate family means children (including adopted and step-children), brothers, sisters, parents, and the spouses of those relatives. Only one item per purpose per person is excluded. For example, one plot and one casket for you, not two caskets.

You must own the space now and have the right to use it. A plan to buy one later does not count.

Burial insurance and SSI: the $1,500 life insurance rule

SSI looks at life insurance by its cash surrender value, the money you would get if you cancelled the policy. Here is how it works:

• If the total face value of all policies on one person is $1,500 or less, the cash value does not count.
• If the total face value is over $1,500, the cash value counts as a resource.
• Term insurance is left out of this math because it has no cash value.
• For SSI, "burial insurance" means a policy that can only be used to pay burial costs and has no cash value you can get. It is also left out of the face value total.

Many final expense insurance policies sold today are small whole life insurance policies with cash value. The beneficiary can use the money for anything. For SSI, that usually makes them regular life insurance, not "burial insurance." Before buying any policy while on SSI, ask Social Security how it will be counted. See what final expense insurance is and our guide to burial insurance vs. life insurance.

What happens if you use burial funds for something else

If you spend excluded burial money on something other than burial for you or your spouse, Social Security can reduce your future SSI payments by the amount you used. This applies when your resources would have been over the limit without the burial fund exclusion.

If you need to use the money, call Social Security first. Report any change in your burial funds, just as you would report other changes in your resources.

Planning a funeral while on SSI, and a note on Medicaid

Steps many people on SSI take:

1. Buy burial spaces ahead of time, such as a plot, casket, vault and headstone, since they do not count.
2. Set up a separate, clearly marked burial account, up to your limit.
3. Consider an irrevocable prepaid funeral contract for services. It is not counted as a resource, but it reduces your $1,500. See pre-need funeral plans and burial trust funds.
4. Tell Social Security about each item and keep copies of the paperwork.

Medicaid has its own burial rules, and they are set state by state. Something that is fine for SSI may be treated differently by your state's Medicaid program. Check with your state Medicaid office before you buy a policy or prepay a funeral.

For other ways families cover costs, see how to pay for a funeral. To estimate costs, try the funeral cost calculator.