CHAPTER 193

An Act concerning prepaid funeral agreements, amending P.L.1993, c.147 and supplementing Title 2A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

C.2A:102-19 Funeral trust, insurance policy excluded from resource consideration in determining eligibility for certain benefits.

1. An aged, blind or disabled applicant for, or recipient of, benefits under the Supplemental Security Income program established pursuant to Title XVI of the federal Social Security Act, Pub.L.92-603 (42 U.S.C. s.1381 et seq.), or an applicant for, or recipient of, benefits under the Medicaid program established pursuant to P.L.1968, c.413 (C.30:4D-1 et seq.), the Work First New Jersey program established pursuant to P.L.1997, c.38 (C.44:10-55 et seq.) or the "Work First New Jersey General Public Assistance Act," P.L.1947, c.156 (C.44:8-107 et seq.), or any successor program thereof, shall have excluded from resource consideration, in determining eligibility for benefits, any moneys of the applicant, applicant's spouse and any other member of his immediate family, as defined in N.J.A.C.10:71-4.4, in an irrevocable funeral trust or irrevocably assigned newly issued funeral insurance policy, as those terms are defined in section 19 of P.L.1993, c.147 (C.2A:102-18), that are equivalent to the fair market value of funeral and burial goods and services selected and contracted for that are intended for the use of the applicant, applicant's spouse and any other member of his immediate family. All income paid to the irrevocable funeral trust or any increase in the face value or death benefit attributable to the irrevocably assigned newly issued funeral insurance policy, shall inure to the value or benefit of the irrevocable funeral trust or irrevocably assigned newly issued funeral insurance policy and shall not be countable as income for continuing eligibility.

C.2A:102-20 Difference between price, services provided paid to State.

2. Notwithstanding any provision of law to the contrary, any moneys remaining in an irrevocable funeral trust or irrevocably assigned newly issued funeral insurance policy that are the result of a difference between the price of funeral and burial goods and services actually provided to the intended funeral recipient, as defined in section 19 of P.L.1993, c.147 (C.2A:102-18), upon that person's death, and the accumulated value of the irrevocable funeral trust or irrevocably assigned newly issued funeral insurance policy, shall be paid over to the State according to the provisions of this act if, at the time of death, the intended funeral recipient was receiving benefits pursuant to section 1 of this act, and the moneys that established the irrevocable funeral trust or the irrevocably assigned newly issued funeral insurance policy were those of the intended funeral recipient or the intended funeral recipient's spouse.

C.2A:102-21 Office of the Public Guardian for Elderly Adults considered purchaser, sole beneficiary under certain circumstances; disposition of remaining moneys.

3. a. If the intended funeral recipient is under the care and guardianship of the Office of the Public Guardian for Elderly Adults, established pursuant to section 4 of P.L.1985, c.298 (C.52:27G-23), in the creation of an irrevocable funeral trust fund or the purchase of an irrevocably assigned newly issued funeral insurance policy, or upon taking charge of such assets, the Office of the Public Guardian for Elderly Adults shall name itself as purchaser, as defined in section 19 of P.L.1993, c.147 (C.2A:102-18), or sole beneficiary, as appropriate. In the case of an irrevocably assigned newly issued funeral insurance policy that provides for a settlement of proceeds, the Office of the Public Guardian for Elderly Adults may, as an alternative to being named beneficiary, be named as payee of the balance of any remaining moneys subsequent to the delivery, as defined in section 19 of P.L.1993, c.147 (C.2A:102-18) of funeral and burial goods and services, but with a claim superior to any beneficial interest.

b. Any moneys remaining thereafter shall be paid to the Division of Medical Assistance and Health Services in the Department of Human Services, by the Office of the Public Guardian for Elderly Adults, in accordance with an order of the Superior Court discharging the Public Guardian for Elderly Adults as guardian of the decedent.

C.2A:102-22 Payment of remainder to Division of Medical Assistance and Health Services.

4. a. In the case of an irrevocable funeral trust of a decedent who is not under the care and guardianship of the Office of the Public Guardian for Elderly Adults, the entire remainder after the payment of funeral and burial goods and services shall be paid to the Division of Medical Assistance and Health Services in the Department of Human Services, as though the division were the purchaser of the trust.

b. In the case of an irrevocably assigned newly issued funeral insurance policy of a decedent who is not under the care and guardianship of the Office of the Public Guardian for Elderly Adults, the policy shall not be excluded as a resource pursuant to section 1 of this act unless the Division of Medical Assistance and Health Services in the Department of Human Services is named the sole beneficiary of the policy, either at the time of issue or during the time that the insured was an applicant for or recipient of benefits of programs specified in section 1 of this act. In the case of an irrevocably assigned newly issued funeral insurance policy that provides for a settlement of proceeds, the Division of Medical Assistance and Health Services in the Department of Human Services may, as an alternative to being named beneficiary, be named as a payee of the balance of any remaining moneys subsequent to the delivery of funeral and burial goods and services, but with a claim superior to any beneficial interest.

C.2A:102-23 Establishment of dedicated bank account.

5. The Division of Medical Assistance and Health Services in the Department of Human Services shall establish a dedicated bank account into which a pooled trust, depository institution or insurance company shall deposit, by means of electronic funds transfer, any moneys to which the State is entitled under the provisions of section 4 of this act and which are funds of decedents whom the pooled trust, depository institution or insurance company reasonably believes were recipients of benefits of programs specified in section 1 of this act at the time of death. A pooled trust, depository institution or insurance company so making deposits shall periodically, but not less than once each calendar quarter, provide to the Director of the Division of Medical Assistance and Health Services in the Department of Human Services, or his designee, a record of the deposits made along with the names and other identifying information of those decedents. As the basis for the actions specified herein, the pooled trust, depository institution or insurance company shall use reasonable business standards of care and judgment, and is entitled to rely upon a designation of an account or contract as irrevocable as signifying program eligibility under section 1 of this act. A pooled trust, depository institution or insurance company, as a condition of offering or providing an irrevocable funeral trust or irrevocably assigned newly issued funeral insurance policy within the State, shall comply with the provisions of this act.

C.2A:102-24 Inclusion of statement in prepaid funeral agreement, insurance policy.

6. A prepaid funeral agreement as defined in section 19 of P.L.1993, c.147 (C.2A:102-18) which is subject to the provisions of this act shall include, in a conspicuous manner, the following statement: "New Jersey law requires this agreement to be irrevocable for applicants or recipients of public assistance programs (such as the Medicaid, Supplemental Security Income (SSI), Work First New Jersey and Work First New Jersey General Public Assistance programs, or any successor program thereof) and for the State of New Jersey to be named as beneficiary of any irrevocable funeral trust or irrevocably assigned newly issued funeral insurance policy purchased or created for the provision and payment of funeral and burial goods and services. Any moneys remaining after the provision of funeral goods and services shall be paid over to the State as required by law."

C.2A:102-25 Relief from liability for claims paid improperly to State.

7. A person, firm, corporation, association, funeral home, pooled trust, depository institution or insurance company and their employees or agents that, in accordance with the provisions of this act, pays money to the State in good faith is relieved of all liability for any claim then existing or which thereafter may arise or be made in respect to the money paid. The estate or personal representative of a deceased person may seek restitution on behalf of the estate for a payment that may have been improperly made to the State. The pooled trust, depository institution or insurance company shall forward the claim, together with its opinion as to whether the payment was improperly made to the State, to the Director of the Division of Medical Assistance and Health Services in the Department of Human Services, or his designee, who shall review the claim and, if the claim is justified,refund in a timely manner moneys found to have been improperly paid over to the State

C.2A:102-26 Inter-agency coordination of financial accounting.

8. The Division of Medical Assistance and Health Services in the Department of Human Services shall coordinate between itself and the Division of Consumer Support in the Department of Health and Senior Services, such inter-agency and inter-governmental financial accounting as is necessary to accurately identify, allocate and transfer benefit credits resulting from this act between the departments on a program basis, and between them and such other agencies of federal, State and local governments as may be applicable.

9. Section 4 of P.L.1993, c.147 (C.45:7-85) is amended to read as follows:

C.45:7-85 Requirements for prepaid funeral agreements.

4. Every prepaid funeral agreement executed in this State shall:

a. Be signed by the provider, and the purchaser or the intended funeral recipient or the intended funeral recipient's guardian, agent or next of kin.

b. Include at least the following information:

(1) the name, address and telephone number of the mortuary to be utilized;

(2) the name of the individual licensee acting as or on behalf of the provider and the license number of that individual;

(3) the purchaser's name and address;

(4) the name of the intended funeral recipient;

(5) whether the agreement is a guaranteed price agreement or non-guaranteed price agreement, which term, as applicable, shall be defined in the agreement in accordance with section 1 of this act;

(6) how the agreement is to be funded; and

(7) a statement of funeral goods and services or, if not included as part of the agreement, that a statement of funeral goods and services shall be provided.

c. Provide that all funeral arrangements are revocable, and that all funeral funding arrangements are severable from those funeral arrangements by the purchaser if alive, and if not, then by the intended funeral recipient, where they are different persons. Upon the death of both the purchaser and the intended funeral recipient, the intended funeral recipient's next of kin, in the order provided in N.J.S.8A:5-18, shall have the right to revoke the funeral arrangements and to sever the funeral funding arrangements from the funeral arrangements. Notwithstanding the above, a prepaid funeral agreement may provide that the funeral trust shall be irrevocable during the lifetime of the intended funeral recipient pursuant to section 1 of P.L.1991, c.502 (C.2A:102-16.1) or section 1 of P.L.1999, c.193 (C.2A:102-19).

In those instances where a revocable prepaid funeral agreement is revoked, the moneys used to fund the agreement shall be paid to the purchaser, if alive, and if not, then to the personal representative or estate of the deceased purchaser if the agreement is funded through a trust or, if the agreement is funded through a funeral insurance policy, to the named beneficiaries on the insurance policy or annuity.

d. Provide that, unless otherwise specified therein, a prepaid funeral agreement anticipates the provision of prepaid funeral goods and services in the area served by the provider. The agreement shall further provide that, if the intended funeral recipient's place of death is in a location other than that served by the provider, alternative funeral arrangements will be necessary.

e. Provide for the provider's substitution of any goods or services to be furnished or rendered thereunder for goods of equal quality, value and workmanship or services of equal quality and value in the event of the unavailability of any goods or services set forth in the agreement. Any changes in the price of the agreement resulting from such substitution of goods or services shall be reflected in the statement of funeral goods and services rendered.

f. Provide that, in the case of an agreement funded through a funeral trust, if the purchaser predeceases the intended funeral recipient where they are different persons, then the intended funeral recipient shall automatically assume the legal right to administer the funeral trust as purchaser, including the right to withdraw any and all funds held in the funeral trust, along with all other rights formerly held by the purchaser.

g. Provide that, upon the death of the intended funeral recipient, the provider shall calculate the current retail prices of the preneed funeral arrangements, and:

(1) in the case of a non-guaranteed prepaid funeral agreement, if there are insufficient funds to pay for the current retail prices of the prepaid funeral goods and services requested, the provider shall consult with the appropriate representative for the supplementation of the funds or the modification of the funeral arrangements set forth in the agreement prior to performance under the agreement.

(2) in the case of an agreement funded through a funeral trust, whether a guaranteed or non-guaranteed price agreement, if the provider determines that the funds or proceeds available exceed the current retail prices of the prepaid funeral goods and services to be provided, the surplus funds shall be paid to the purchaser, if alive, and if not, then to the personal representative of the estate of the deceased.

(3) in the case of an agreement funded through a funeral insurance policy, whether a guaranteed or non-guaranteed price agreement, if the provider determines that the funds or proceeds available exceed the current retail prices of the prepaid funeral goods and services to be provided, the surplus funds shall be paid to the named beneficiaries of the funeral insurance policy.

h. Provide that, upon completion of performance under the agreement, the provider shall present a final bill.

i. Provide that if a prepaid funeral agreement is a guaranteed price agreement, the price guarantee is a guarantee and liability of the provider and not the guarantee and liability of the insurer issuing the funeral insurance policy when a funeral insurance policy is used or the trust depository administering the funeral trust when a funeral trust is used.

10. This act shall take effect 180 days from the date of enactment and shall apply to irrevocable funeral trusts or irrevocably assigned newly issued funeral insurance policies entered into on or after the effective date.

Approved August 31, 1999.