Planning ahead for MassHealth (Medicaid in Massachusetts) eligibility is essential for seniors who want to protect their hard earned assets for themselves and their loved ones. However, the many rules and regulations involved in asset protection and MassHealth eligibility can be complex. Often, my clients want a simple plan of attack that they can understand before structuring their estate plan. I always try and break down the various asset protection options into plain English, and consistent with this approach, I’d like to present a simple overview of Massachusetts long term care Medicaid planning and asset protection. Here are the steps that I often take people through to protect their assets and qualify for Massachusetts Long Term Care Medicaid:
Know the Basic Asset Rules
If you are a single person and have more than $2,000 in Countable Assets when you apply for MassHealth, you won’t qualify for Massachusetts Long Term Care Medicaid. If you are a married person and one spouse will still be living in the community, the asset limit is $111,000. Common types of Countable Assets include bank accounts, investments, IRAs, annuities, and real estate.
Know the Basic Penalty Rules for Making Transfers
If you transfer assets out of your name, such as making a gift, you will be penalized from MassHealth Eligibility and given a period of disqualification. The length of your disqualification depends on the amount of money transferred and the then current daily MassHealth rate. The penalty period doesn’t start until you are in the nursing home and you have less than $2,000.
Review Your Assets
Make a list of everything you own. Pretty much everything you own is a Countable Asset except for your home (in some cases), personal household property and your car (up to a certain value). Having more than $2,000 worth of Countable Assets will prevent you from becoming eligible for MassHealth, which means you will have to fork out up to $10,000 per month to the nursing home.
Create a Medicaid Trust
You will want to create a very specific type of trust so that you can control your life savings but protect it from nursing home costs. The trust must be irrevocable and you cannot be a principal beneficiary of the trust. You can be the trustee of your trust and can retain the power to change your beneficiaries.
Transfer Assets to Your Trust
Assets you want to protect should be transferred to your trust. The transfer starts the five year period which must expire before your assets are fully protected from MassHealth. This is called the MassHealth look back period. You can keep enough assets in your name to spend on your care and get you through the next five years. Be aware that you cannot transfer IRAs to a trust without first taking a distribution from the IRA. It may be advisable to leave the IRA in your name and spend it over the next five years.
Stay educated and Monitor Your Situation
Your estate plan may need to be adjusted over time due to life changes and changes in the law. That’s why it’s important to work with professionals like us who understand the issues and want to maintain a lifetime relationship with you and your family.
As you might imagine, planning for MassHealth Medicaid eligibility can be more complex than that but now you have the basics. Every Massachusetts family is unique and it’s our job is to apply our MassHealth/Medicaid planning experience to your unique family story.
If you would like to participate in a no-cost legacy planning family meeting, call our office today to set one up. Procrastination in this area can literally destroy a family. Take action today and call.