With the right planning, a person can become eligible for MassHealth (Medicaid in Massachusetts) to help with long-term care costs.
What is MassHealth (Medicaid)?
Medicaid was created by Congress in 1965 to help with insurance coverage and protect seniors from the costs of medical care, regardless of their income, health status, or past medical history, reports Kiplinger in a recent article “How to Restructure Your Assets to Qualify for Medicaid.” Medicaid is a means-based program, with broad federal parameters, that is run by the individual states. Eligibility criteria, coverage groups, services covered, administration, and operating procedures are all managed by each state.
For people 65 years of age and older who are being faced with the increasing costs and need for long-term care, MassHealth has become a lifesaver. It covers the costs of a long-term nursing home stay or home health care that aren’t covered by Medicare. Here are the MassHealth eligibility requirements for seniors and some estate planning tools that can protect their assets.
MassHealth has an income eligibility threshold. MassHealth income standards for a family of two is $522 monthly, $6,264 annually. More information is located at mass.gov. (figures from February 1, 2022)
MassHealth also has a countable assets eligibility threshold. Whether single or married, you can 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 $132,380 in their name. (figures from February 1, 2022)
We can review your current situation and make recommendations for strategies to help you qualify for MassHealth. Some strategies include:
Irrevocable trust: This type of trust can’t be changed or dissolved after they’re created. You may transfer most or all of your assets into this trust, including your home, and maintain the right to live in your home. This trust offers asset protection against taxes and creditors while also protecting your eligibility for certain government benefits, like MassHealth.
If you put assets in the trust that generate income like investments, you can still get that income to use. Upon your death, assets are transferred to beneficiaries, according to the trust documents.
Annuities: For a married couple, if only one spouse applies for MassHealth, annuities can help reduce countable assets for the applying spouse. In this instance, a lump sum is paid to the insurance carrier, and that carrier then makes a monthly payment to the non-applying spouse, thereby converting countable assets into non-countable income.
Qualified income trusts (QITs): Also known as a “Miller Trust,” income is deposited into this irrevocable trust, which is controlled by a trustee. The trust is irrevocable, meaning assets in the trust can’t be removed or returned to you. The trust can’t be changed. Restrictions on what the income in the trust may be used for are strict. Both the primary beneficiary and spouse are permitted a “needs allowance,” and the funds may be used for medical care costs and the cost of private health insurance premiums. However, the funds are owned by the trust, not the individual, so they don’t count against MassHealth eligibility.
Pooled income trust, if you qualify as disabled: This is another irrevocable trust where your “surplus income” is deposited. Income is pooled together with the income of others. The trust is managed by a non-profit charitable organization, which acts as a trustee and makes monthly disbursements to pay expenses for the individuals participating in the trust. When you die, any remaining funds in the trust are used to help other disabled persons.
Spend down your assets: To spend down appropriately, you must spend assets on your needs, including medical care, in-home supports like personal care and cleaning, home repairs, car repairs, eyeglasses, hearing aids, and mobility aids. You can also pay bills/debts like credit cards, mortgage payments, taxes, and car payments even if those costs are owed by your spouse. Assets can also be used to pay for burial and funeral expenses in advance.
Mistakes Can Be Costly
For instance, your home’s value (up to a maximum amount) is exempt, as long as you still live there or will be able to return. Transferring assets to other people, typically family members, is a risky strategy. There’s a five-year look back period and if you’ve transferred assets, you may not be eligible MassHealth for five years. If the person you transfer assets to has any personal financial issues, like creditors or divorce, they could lose your property.
Planning in advance is the best means of protecting yourself and your spouse from the excessive costs of long-term care. To learn more about MassHealth eligibility and protecting your assets, contact us today to set up a free, confidential consultation.