If your assets are above the Medicaid limit, you may need to spend down some of your assets in order to qualify for Medicaid. Buying a funeral contract and/or burial plot could help you do this, because Medicaid does not count prepaid irrevocable funeral contracts that cost less than $10,000 (as of January 1, 2020) as an asset.
Buying a funeral contract lets you make your own funeral arrangements in advance instead of having the town, state, or your family pay for it. If you have very low income, the town or state will only pay up to $1,200 of the costs.
If you decide to buy a funeral contract, it is best if you buy an irrevocable contract. Remember: Irrevocable contracts cannot be canceled or refunded, but most are usually transferable, so you can decide to transfer to a different funeral home in the future. But do not pay more than the fair market value for anything.