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The Heritage Law Center, LLC Blog

Understanding Massachusetts Medicaid Estate Recovery

POSTED ON: April 25, 2024

In Massachusetts, we often refer to Medicaid as MassHealth. MassHealth pays for the health care for Massachusetts residents who have limited income and resources. Our firm specifically helps seniors (aged 65 and over) with MassHealth for long-term care, which is provided either in a nursing home setting or in the community.

MassHealth is a great resource since the cost of long-term care has become extraordinarily high. In the Boston area, nursing home costs average around $14,000 per month. However, federal and state Medicaid law require MassHealth to try to get reimbursed for the money they pay to cover the cost of care for a MassHealth member, which is an effort called  Medicaid Estate Recovery.

Who’s Affected By Medicaid Estate Recovery?

  • Any members who received care after age 55 or older, or
  • Members of any age who were permanently in a long-term care or other medical facility (like a nursing home).

How Does MassHealth/Medicaid Recover Money?

After a MassHealth member dies, Medicaid Estate Recovery tries to get reimbursed from the assets owned by the deceased member when they go through the probate court. Medicaid can recover from assets like money in bank accounts and/or money from the sale of the deceased’s property like a home or vehicle.

There are instances when MassHealth may delay the recovery process or “waive” it.

How Much Money Can MassHealth Recover?

By law, Medicaid estate recovery can result in the reimbursement for the total amount paid to cover health care expenses for a member from the age of 55 and over, or a member who lived in a long-term care or other medical facility.

Medicaid Asset Protection Strategies

Irrevocable Trust: As the person creating the irrevocable trust (grantor), you must select a person to manage the trust since you’re not allowed to. This type of trust typically can’t be changed or revoked. Once the assets have been transferred into the trust, they can’t be removed.

By putting an asset in an irrevocable trust, that asset is seen as being owned by that trust, not an individual. An asset must be in an irrevocable trust for at least five years before you apply for MassHealth for long-term care for that asset to be protected – meaning it won’t count as an asset when you apply and Medicaid Estate Recovery won’t be able to access the asset in your trust after you pass away.

Life Estate: A life estate is a type of deed lets you continue to own your property (primary residence) during your lifetime and names the person you want to pass the property to (remainder person) when you die. You retain the exclusive right to live in your home until you pass away. You’ll continue to pay the expenses of the property, such as taxes, insurance, and maintenance costs. This type of deed is fitting to use if the property isn’t going to be sold during your lifetime. It protects the home from estate recovery.

Early Gifting: When you gift assets during your lifetime, you are reducing the value of your estate. Remember, MassHealth has eligibility limits for both assets and income so reducing the size of your estate is working toward qualifying for MassHealth for long-term care in case you ever need it. Keep in mind, the same five-year look-back applies. When you apply for MassHealth for long-term care, they will look back five years for any transfers over $1,000. If you gifted an asset during those five years, MassHealth has the right to disqualify you unless you get that gift back and/or use the value of it toward your own health care.

Be Proactive —Talk to Our Massachusetts Medicaid Planning Attorney

It’s so important to start your MassHealth planning early in order to protect your assets and better position yourself to be eligible for MassHealth for long-term care in case you ever need it. The five-year look-back period will come into play, so planning in advance is essential. Contact us today to talk to our knowledgeable elder law attorney.