To be eligible for Medicaid in Massachusetts (MassHealth), an applicant needs to meet certain medical and financial requirements. The medical requirements, which depends upon the extent to which an applicant needs assistance with the activities of daily living, are usually less of an obstacle for applicants than the financial requirements. To avoid being denied access to MassHealth, proper estate planning should be sought well before an anticipated need for services arrives.
The basic rule for MassHealth long-term care eligibility is that the applicant, whether single or married, can have only $2,000 in countable assets in their name. If the applicant is married and the spouse plans to continue living in the community, the spouse is allowed to keep a maximum of $109,560 in their name. If an applicant applies to MassHealth with more assets that this, they will be required to spend down those assets to the applicable limit, usually on healthcare costs.
Obviously these asset limits put people who have saved to be able to provide for their families in the unenviable position of either being denied MassHealth eligibility or else having to spend all of their hard-earned assets on healthcare costs, leaving nothing for their families or selected charities.
Another obstacle in achieving MassHealth eligibility is the five year look-back period. The Division of Medical Assistance (DMA) has the right to examine MassHealth applicant’s bank and financial records for up to five years immediately prior to the application. If the DMA discovers a transfer of assets during this period they will impose a disqualification period on the applicant’s eligibility. The length of disqualification period (in months) is determined by dividing the amount transferred by approximately $8,000 (the monthly cost of privately paid Medicaid). For example, a transfer of $80,000 would result in a 10 month disqualification period, starting when the applicant is otherwise qualified for MassHealth.
This disqualification period can have devastating effects on an applicant’s financial estate. Although there are estate planning methods available to those who need immediate MassHealth eligibility, planning before the look-back period begins provides the greatest amount of options and flexibility to the applicant. You should contact an estate planning attorney to discuss your options even if you don’t think you or your loved one will need MassHealth for some time.