While planning ahead for Medicaid (MassHealth) qualification is always in your best interest, sometimes families are confronted with a crisis and need more immediate planning assistance. If your loved one needs to enter a long-term care facility in the very near future, or has already entered and needs to qualify for MassHealth before all of their resources are depleted, there are still some estate planning options on the table. By utilizing the community spouse’s resource allowance and strategic annuities, estate planning can still help to protect your family.
Example: Let’s suppose Abe and Betty are a married couple in their mid-sixties. Betty is in good health but Abe recently suffered a stroke and has entered a nursing facility. They own their home and have $400,000 in investments. What should Betty do?
MassHealth eligibility rules allow the community spouse (which is Betty in this example) to keep the house as a non-countable asset. She is also allowed to keep $109,560 in personal assets while Abe can keep $2,000. Betty could purchase an annuity for the balance of their assets ($400,000 – $109,560– $2,000 = $288,440) as long as it meets certain MassHealth requirements. MassHealth regulations allow her to make the term of the annuity shorter than her life expectancy. If she made the term for two years, she could get the money back quickly allowing her to protect it as part of her own MassHealth plan. In this scenario Betty’s annuity would pay her $12,018 per month ($288,440 / 2 years / 12 months) which is far more than she would need to live on. To effectuate her own plan in case she also needs MassHealth benefits, Betty could then transfer the house to an irrevocable trust. Each month, excess funds from her annuity would also be transferred to the trust. Five years from the date of her house transfer it would be fully protected from the costs of long term care. Each month after that, another transfer of cash would be protected as well.
If your loved one needs immediate long-term care, contact a Massachusetts estate planning attorney as soon as possible to help put a plan in place to get your loved one the services they need while protecting your family’s future.
*This scenario is only offered as one example of effective MassHealth planning. Each person’s own circumstances are different and there are many considerations to take into account when deciding on a proper course of action. You should consult a Massachusetts estate planning attorney to discuss your personal options.