South Carolina Medicaid Burial Rules: Burial Funds, Preneed Contracts and Insurance

South Carolina Medicaid burial rules are more generous than most states’ rules in two ways. Life insurance cash value is ignored when total face value is $10,000 or less, and the $1,500 burial fund is not reduced by that insurance. These rules come from the South Carolina Department of Health and Human Services (SCDHHS) Medicaid Policy and Procedures Manual (MPPM). This guide explains them for nursing home and aged, blind and disabled (ABD) applicants, with a worked example.

This is general information, not legal advice. Before you buy a funeral contract, assign a policy or move money, talk with a South Carolina elder law attorney. The South Carolina Bar offers a lawyer referral service, and South Carolina Legal Services helps eligible older adults at no cost.

South Carolina Medicaid burial rules and the asset limits

South Carolina Medicaid burial rules matter because they decide what is left to count against the limit. SCDHHS uses different limits for different groups:

MPPM 304.05.02 printed the higher nursing home figure as $9,660 when it was last revised on January 1, 2025. SCDHHS now lists the ABD limit as $9,950 for 2026, and the manual’s own 2026 pre-need example uses $9,950. Ask your eligibility worker which figure applies to your case.

Figures are from the SCDHHS Medicaid Policy and Procedures Manual and SCDHHS’s eligibility page as of October 2026 and are shown for illustration only. They are not quotes or offers, and they can change. Confirm current numbers with SCDHHS or a licensed agent.

South Carolina’s $10,000 life insurance face-value rule

Under MPPM 302.17, a life insurance policy is a resource only if it has a cash surrender value. MPPM 302.17.01 (rev. May 1, 2026) adds the key test. Policies are totaled by insured person. If the total face value for that insured person is $10,000 or less, the policies are not counted for the owner.

• Over $10,000: the cash surrender value is verified and counted.
• Dividend accumulations held by the insurer may still count, even when the policy itself is excluded.
• Self-reported face value totaling $10,000 or less can be excluded without extra paperwork, per MPPM 302.17.

This is where the South Carolina Medicaid burial rules differ most from federal SSI rules, which set this threshold at $1,500. South Carolina’s “liberalized” resource policy in MPPM 302.05 raises it to $10,000. That makes a small final expense policy much easier to keep. A $7,500 or $10,000 whole life policy can be ignored entirely, while a $15,000 policy puts all of its cash value on the table.

The $1,500 South Carolina burial fund exclusion

MPPM 302.19.04 lets the eligibility worker exclude up to $1,500 each for the applicant’s burial and the spouse’s burial. Burial funds can be revocable burial contracts or trusts, cash, bank accounts, stocks, bonds, CDs, or the cash value of life insurance, as long as they are clearly designated for burial (MPPM 302.19.03). A car or real estate cannot be a burial fund.

How the South Carolina burial fund exclusion works in practice:

• Not offset by life insurance. MPPM 302.05 says the burial fund exclusion is not reduced by the face value of life insurance. It is reduced only by the burial fund portion of an irrevocable trust or burial contract.
• Keep it separate. Burial funds cannot be mixed with non-burial assets. The manual suggests opening a separate account.
• Interest is excluded on the designated amount.
• It can reach back to the date the money was first designated for burial. Designation is documented on SCDHHS Form 1766-A ME.

If money covered by the South Carolina burial fund exclusion is used for something else, MPPM 302.19.05 counts the misused amount as a resource for the month after the misuse is discovered.

Burial spaces: no value limit in South Carolina

MPPM 302.19.02 excludes a burial space “regardless of value.” Burial spaces include a plot, gravesite, crypt, mausoleum, casket, urn or niche, plus vaults, headstones, markers, burial containers and opening and closing charges. A perpetual care contract can also be excluded as a burial space.

The exclusion covers spaces held for the applicant, the spouse and other immediate family. MPPM 302.19.01 defines immediate family as parents, children, siblings, and the spouses of those relatives. One limit applies: only one burial item serving the same purpose can be excluded per person. Two caskets for one person, for example, would not both be excluded.

Federal context. The federal SSI rule at 20 CFR 416.1231 also excludes burial spaces without a value limit and sets a $1,500 burial funds exclusion. South Carolina follows that model but departs from it on life insurance offsets.

South Carolina irrevocable preneed contracts

Preneed funeral contracts are regulated by the South Carolina Department of Consumer Affairs under S.C. Code Title 32, Chapter 7. Section 32-7-25 lets the purchaser make a contract irrevocable, with 30 days to examine it and revoke for a full refund. A revocable contract must be refunded on written demand under § 32-7-30.

How SCDHHS treats these contracts under MPPM 302.20:

• Revocable contracts are resources, though the burial space items and up to $1,500 of burial fund items in them may be excluded.
• Irrevocable contracts are not a resource, retroactive to the date of purchase, once the 30-day period ends (MPPM 302.20.03, rev. July 1, 2026).
• The offset. The burial fund portion of an irrevocable contract, meaning services rather than spaces, uses up the $1,500 burial fund exclusion.
• Only money actually paid counts. You cannot set aside other money “for future payments” on a contract and have it excluded (MPPM 302.20.01).

No dollar cap on a South Carolina irrevocable preneed contract appears in MPPM 302.20. The contract still has to reflect real funeral goods and services.

Insurance-funded funeral contracts

Many funeral homes fund preneed contracts with a life insurance policy. MPPM 302.20.04 treats this as different from burial insurance, and the result depends on what you assign:

• Irrevocable assignment of ownership to the funeral provider: the policy and the contract are not your resources, because you no longer own the policy (MPPM 302.20.04A). Burial space items can be excluded if their values are listed.
• Revocable assignment of ownership: the cash value is the resource, and the burial fund exclusion may apply.
• Assignment of proceeds only: you still own the policy. If total face value is $10,000 or less, the cash value is excluded under the life insurance rule. If it is over $10,000, the cash value counts, and the $1,500 burial fund exclusion may apply (MPPM 302.20.04B).

Under the South Carolina Medicaid burial rules, the wording of the assignment form matters as much as the policy. Ask the funeral home for a copy of every signed form.

Hypothetical example: South Carolina’s numbers at work

Hypothetical example. Dorothy is 84, single and entering a nursing home. Her income is above the ABD income limit, so the $2,000 limit applies. She owns:

• Checking: $1,400.
• A whole life policy: $12,000 face value, $4,100 cash surrender value.
• A savings account designated for her funeral: $2,500.
• A cemetery plot.

Step 1, life insurance. Face value is $12,000, over $10,000, so the $4,100 cash value counts.

Step 2, burial fund. $1,500 of the savings is excluded and not offset by the policy. $2,500 − $1,500 = $1,000 counts.

Step 3, plot. Excluded as a burial space.

Step 4, total. $1,400 + $4,100 + $1,000 = $6,500. That is $6,500 − $2,000 = $4,500 over.

One possible fix. With an attorney, Dorothy signs an irrevocable preneed contract, irrevocably assigns ownership of the policy to the funeral home, and pays the $2,500 savings toward a headstone and vault in the same contract. After the 30-day period, neither counts. Her countable resources are $1,400, under $2,000. This is an illustration only.

South Carolina Medicaid estate recovery

South Carolina Medicaid estate recovery is set by S.C. Code § 43-7-460. SCDHHS must seek recovery from the estate of a person who:

• was a nursing facility or other medical institution inpatient at death and had to spend nearly all income on care, or
• was 55 or older when receiving nursing facility, home and community-based, hospital or prescription drug services.

Recovery may happen only after a surviving spouse dies, and only when there is no surviving child under 21 or child who is blind or permanently and totally disabled. SCDHHS must waive recovery on proof of undue hardship by an heir. “Estate” means the probate estate under S.C. Code § 62-1-201(11).

A South Carolina irrevocable preneed contract is spent on the funeral, so that money is not left in the estate for South Carolina Medicaid estate recovery. Life insurance paid to a named, living beneficiary generally passes outside probate.

South Carolina Medicaid burial rules checklist

1. Ask your eligibility worker whether the $2,000 limit or the higher ABD limit applies.
2. List every policy by insured person, with face value, cash value and any dividend accumulations.
3. If face value per insured person is $10,000 or less, note that the policies should be excluded.
4. Put burial money in a separate account and complete Form 1766-A ME.
5. Get the funeral home’s itemized contract showing spaces and services separately.
6. Decide, with counsel, whether the contract will be irrevocable, and mark the 30-day date.
7. Keep copies of any policy assignment and note whether it assigns ownership or only proceeds.
8. Keep the cemetery deed and headstone receipts.
9. Name a living beneficiary on every policy.
10. See a South Carolina elder law attorney before any transfer.

South Carolina Medicaid burial rules: frequently asked questions

Does my life insurance count for South Carolina Medicaid?

Not if the total face value of policies on one insured person is $10,000 or less, under MPPM 302.17.01. Above $10,000, the cash surrender value counts. Term policies with no cash value are not resources at all.

How much burial money can I keep?

Up to $1,500 for you and $1,500 for your spouse, kept separate from other money. The South Carolina burial fund exclusion is not reduced by life insurance, but it is reduced by the services portion of an irrevocable burial contract.

When does a preneed contract stop counting?

Under MPPM 302.20.03, an irrevocable contract is not a resource once its 30-day revocation period ends, retroactive to the purchase date. A revocable contract stays a resource, apart from its excluded burial space items and burial fund amount.

Is there a cap on a South Carolina irrevocable preneed contract?

MPPM 302.20 does not state a dollar cap. Only amounts actually paid, or specific policies designated to it, can be excluded. Its burial fund portion uses up the $1,500 burial fund exclusion.

Can I buy burial plots for my children?

Yes. Burial spaces held for immediate family, including parents, children, siblings and their spouses, are excluded regardless of value. Only one item serving the same purpose is excluded per person.

Will South Carolina take my home or insurance after I die?

South Carolina Medicaid estate recovery reaches the probate estate of people 55 or older or permanently institutionalized. It waits while a spouse survives, and does not apply if there is a child under 21 or a blind or disabled child. Insurance paid to a named, living beneficiary generally passes outside probate.

How Octans can help South Carolina families

Octans is an independent agency, and our licensed agents compare final expense and burial insurance options from more than 120 carriers. We are not attorneys. Once your attorney confirms how a policy fits the South Carolina Medicaid burial rules, we can help you price coverage. Estimate costs with our funeral cost calculator, read our guide to life insurance for seniors, or see our South Carolina life insurance guide. Call (617) 935-9220.

Keep Reading: Related Guides

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• Burial insurance
• Funeral cost calculator
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• Medicare Advantage plans in South Carolina (2027)
• Unclaimed life insurance in South Carolina

Important: Octans Insurance agents are licensed in the states in which they operate. Coverage availability and rates may vary by state. Premium examples, when provided, are illustrative samples from published sources, not quotes. Final rates are determined by the insurance carrier based on underwriting and applicable policy criteria. Policy terms, exclusions, limitations, riders, and availability vary by carrier and state.

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