MassHealth, a.k.a Medicaid in Massachusetts, is a state program that assists individuals with payment of long term care and other medical costs. Long term care costs in Massachusetts can reach up to over $100,000 per year, so for all but the wealthiest of people planning ahead for MassHealth eligibility is a must. To be considered eligible for MassHealth applicants must meet very strict income guidelines, which are broken down as follows:
Exempt Assets for MassHealth Eligibility
For a married couple with one spouse living in the community and the other applying to MassHealth, the spouse living at home can keep their principal residence plus $109,560 of other assets (including cash, stocks, bonds and other investments). The community spouse can also have a monthly income allowance set at a minimum of $1,822 and a maximum of $2,739.
The spouse in the nursing home can only keep $2,000 worth of assets and receive $72.80 in monthly income for discretionary spending. All other assets of the couple, if not planned for strategically, will need to go toward long term care costs.
Single persons applying for MassHealth are at an even greater disadvantage. They are allowed to keep their principal residence if its value is less than $750,000, plus $2,000 worth of assets and $72.80 in monthly income. However, the residence will become subject to a MassHealth lien that will need to be paid when the home transfers ownership.
Married couples and single persons are both allowed to have:
• irrevocable prepaid funeral contracts or trusts;
• a $1,500 burial bank account;
• permanent life insurance having a death benefit of less than $1,500;
• term life insurance;
• personal items; and
• one automobile if needed for transportation .
MassHealth Asset Transfer Rules
As I’ve discussed in previous posts, MassHealth imposes a five year “look back” period for all transfers of assets. That means that any transfer of assets during that five year period which did not result in an equal exchange of value (like a gift or placing assets in a trust) will result in a period of MassHealth ineligibility. Certain transfers, however, will not be considered disqualifying, including:
• Transfers to a spouse;
• Transfers to persons considered disabled under the Social Security Act;
• Transfers to a Special Needs Trust;
• Transfer of home to a caretaker child;
• Transfer of home to a sibling with an equity interest in the home.
Anything assets transferred outside of these exceptions and any assets above the strict Masshealth asset limits will require estate planning in order to avoid disqualification. Obviously qualifying for MassHealth is something a great many people in Massachusetts may need to do. Without proper planning, these restrictive asset and transfer limits can cause your entire life’s savings to be stripped away. Speak with an estate planning and elder law attorney to find out how you might be able to benefit from planning ahead for MassHealth.