In Massachusetts, nursing home costs average over $12,000 per month. Assisted living averages over $5,000 per month. While the costs of care continue to rise, many families remain unable to figure out how to pay for these services. Often this results in seniors depleting their assets and having to rely on their adult children to cover their care expenses. It’s important to plan ahead by doing estate planning to prepare for long-term care.
Planning for MassHealth
MassHealth (Medicaid in Massachusetts) is a joint federal/state program that assists individuals with payment of long-term care and other medical costs. If you’re 65 or older, to apply for MassHealth to cover your nursing home costs, you should have only $2,000 in countable assets in your name. If your spouse plans to continue living in the community, your spouse is allowed to keep approximately $128,640 in their name. In addition, to be eligible for MassHealth, you must not have transferred assets within five years of applying for MassHealth. If you have, you may be subject to a penalty period during which you can’t receive benefits.
If you plan in advance, you can use estate planning to protect some of your assets in preparation for the possibility that you might need MassHealth coverage for long-term care.
A Massachusetts living trust is a legal document that can hold legal title to your assets. Think of it like a box where you can hold your assets for your benefit during your lifetime, and thereafter for the benefit of another person (beneficiary).
One type of a living trust is an irrevocable trust. An irrevocable trust can’t be changed or dissolved after it’s created. They are less flexible than revocable trusts, but they provide greater protection for the assets in them. The protection is due to the fact that technically the assets in the irrevocable trust don’t belong to you anymore; they belong to the trust. Therefore, MassHealth doesn’t count the assets in the irrevocable trust as being yours. However, keep in mind that income on the trust does count toward your eligibility for MassHealth, and if you do move to a nursing home, the trust income will have to go to the nursing home.
The key is to make sure the assets are put into an irrevocable trust at least five years before you apply for MassHealth to avoid MassHealth’s 5-year-look-back period.
An annuity is a contract between you and an insurance company. It’s designed to protect and grow your money, and then provide a stream of income to you during your retirement. You pay a lump sum of money upfront to the insurer, and the insurer sends you a monthly check for the rest of your life. An annuity is considered a non-countable income stream for MassHealth as long as the income is in the name of the spouse who isn’t in the nursing home.
How We Can Help
As a skilled Massachusetts MassHealth planning lawyer, I understand MassHealth rules and can work with you to plan for long-term care and protect your assets for future generations of your family.
Contact us today to schedule a confidential, no-cost consultation to discuss how we can help you.