32 Things You Should Know When Applying for MassHealth to Cover Nursing Home Care in Massachusetts
MassHealth (nationally known as Medicaid) is the Massachusetts health care program that can help pay for nursing home care. MassHealth has lots of complicated rules, and you have to file a detailed application in order to try to get financial help from the MassHealth program. A lot of “helpful” people tell other people things about MassHealth that aren’t quite accurate. Some of the things you should know about MassHealth are:
1. Countable Assets. If you are a nursing home resident, you are allowed to keep only $2,000 in “countable assets.” Some assets can be kept if they are considered noncountable or inaccessible. (See What Are Considered Noncountable Assets on a MassHealth Application? and also see What Is an Inaccessible Asset When Applying for MassHealth?)
2. Principal Residence. Your home is usually not considered a countable asset, unless it is in a revocable trust. If you answer a key question the wrong way on the MassHealth application, the home is then considered to be a countable asset, and it has to be sold.
3. Spenddown. If you have countable assets over $2,000, you are required to “spend down” those assets, unless there are any permissible transfers available to you under the law. Sometimes, the “spenddown” process can involve making investments.
4. Community Spouse Resource Allowance. If you are the spouse of a nursing home resident, you are allowed to keep up to $117,240 of the couple’s countable assets (as of 1/1/2014). (See Protecting Assets and Maximum Income in 2014 When Applying for MassHealth to Help Pay for the Unhealthy Spouse’s Nursing Home Bills)
5. Personal Responsibility of Spouse. The community spouse is personally responsible under Massachusetts law for the unpaid nursing home bills of the institutionalized spouse. (See Are You Personally Responsible for Your Spouse’s Nursing Home Bills in Massachusetts?)
6. Permissible Transfers. There are some types of gifts that can be made without any MassHealth penalty. Transfers of anything can be made to your spouse, to a disabled person, to a special needs trust for a disabled person, or to a pooled trust. Transfers of your home can sometimes be made to a sibling or a caregiving child. (See Despite Medicaid Transfer Restrictions, Some Transfers of the Home are Always Safe and also see Proper Medicaid Planning May Permit Keeping the Home in the Family)
7. Interspousal Transfers. Gifts between spouses are always safe, so a MassHealth lookback problem does not apply. A large gift to a spouse who is not a United States citizen, however, can cause federal gift tax. (See When Can Spouses Make Gifts to Each Other in 2014 without Causing a MassHealth or Federal Gift Tax Problem?)
8. Income. If you are a nursing home resident, your income is not available for alimony and is rarely available for household expenses. Your income can be used for your health insurance, and you are allowed a “Personal Needs Allowance” of $72.80. All of your other income goes to the nursing home unless you have a spouse or dependent child, or unless you have pre-eligibility medical expenses. (See Pre-eligibility Medical Expenses Can Be Paid from MassHealth Recipient’s Income)
9. Spouse’s Income. If you are the spouse of the nursing home resident, your income remains yours, and you may be able to receive some of the income of the nursing home resident to bring you up to at least $1,939 per month (as of 7/1/2013). (See Minimum Monthly Maintenance Needs Allowance for Nursing Home Resident’s Spouse Is Now $1,939 until 6/30/2014 and also see What Is the Excess Shelter Allowance When Filing a MassHealth Application in 2013-2014?)
10. Noncountable Income. Some types of income are exempt from MassHealth consideration. Aid and Attendance from the Veterans Administration and Holocaust reparations payments are two examples of noncountable income. (See What Income Is Considered to Be Noncountable in the MassHealth Application Process?)
11. Accumulated Noncountable Income. An accumulated amount of noncountable income can often be preserved as an asset and is not required to be spent before obtaining MassHealth eligibility.
12. Lookback Period. When applying for MassHealth, you are required to show account statements going back five years. Everything you did financially during this five year-lookback period can be scrutinized, and failure to provide the necessary information can result in a MassHealth denial.
13. Disqualifying Transfers. Any gifts or below market sales during the five-year lookback period can be treated as disqualifying transfers, and cause a period of MassHealth ineligibility. Unexplained expenditures can often be treated as gifts. (See What Is Considered a Disqualifying Transfer When Applying for MassHealth?) Fortunately for MassHealth applicants, exceptions can be made based on the intentions and circumstances that existed when the gift was made. (See When Are a MassHealth Applicant’s Intentions Considered in Determining Whether a Disqualifying Transfer Occurred?)
14. Ineligibility or Disqualification Period. Any gifts or below market sales during the five-year lookback period can be penalized by a period of MassHealth ineligibility. Unfortunately, that period does not begin until you are left with only $2,000 in countable assets. (See What Is the Difference Between the MassHealth Lookback and Disqualification Periods?)
15. Cures. Any gift that occurred within the last five years that is not a permissible transfer would cause a MassHealth penalty. Undoing the gift by giving the gift back to the MassHealth applicant undoes the penalty, and is known under MassHealth rules as a cure. Giving back less than the full amount is known as a partial cure. (See What Is Considered to Be a Cure or Partial Cure by MassHealth?)
16. Jointly-Held Assets. Some assets held in joint names are considered equally owned by each joint holder, but a bank account that has the MassHealth applicant’s name on it is usually considered to be fully owned by the MassHealth applicant. (See Jointly-Held Assets in Massachusetts: The Good, the Bad and the Ugly.)
17. Annuities. When an annuity is irrevocably annuitized, the stream of payments is considered income by MassHealth and the annuity is no longer considered to be a countable asset. In all other situations, an annuity is just another countable asset, so there is rarely any reason to buy an annuity in advance of its need. (See Is a Deferred Annuity Helpful from a Medicaid or MassHealth Standpoint? and also see Should You Get a Second Opinion Before Buying Annuities?)
18. Revocable Trusts. Assets held in revocable trusts are countable assets. If your home is in a revocable trust, it is considered to be a countable asset unless you get the home deeded back to your name. (See In Medicaid Planning, Some Trusts Can Put Elderly Persons in a Worse Position Than If They Had Taken No Action At All)
19. Irrevocable Trusts. Irrevocable Trusts are closely scrutinized by MassHealth lawyers, who often write memos of law rejecting trusts. The more control you have over the trust, the more likely it will be attacked by MassHealth lawyers. (See Doherty Case Should Cause Some Concern about Irrevocable Medicaid Trusts in Massachusetts) In fact, as of this date it appears that every trust involved in a MassHealth application is sent to MassHealth lawyers, and they challenge every trust.
20. Testamentary Trust for Spouse. Under federal Medicaid law since 1985, a trust for the surviving spouse’s benefit contained in the will of the predeceased spouse must be ignored for MassHealth eligibility, and the assets in that type of trust are protected.
21. Pooled Trust Account. Countable assets can become exempted from MassHealth spenddown requirements if placed in a pooled trust account for the MassHealth applicant’s benefit. Doing so can allow the nursing home resident to have more than the standard $2,000 available for future personal needs. (See What Is a Pooled Trust?)
22. Banking Information. You do not have to pay banks to retrieve five years of banking statements. Banks are required under Massachusetts law to give that information to you free-of-charge if you follow MassHealth procedures. (See How to Obtain Free Banking Information for MassHealth Applications)
23. MassHealth Application Forms Are Available Online. Up-to-date MassHealth application and appeal forms can be found at MassHealthApplication.com. Brief explanations of the forms are included there.
24. MassHealth Application “Assistance”. The MassHealth application process is quite difficult for some families. Some nursing homes offer help with the MassHealth application, and some nursing homes refer families to non-lawyers who offer assistance with the MassHealth application. Unfortunately, they are not always aggressively representing the applicant’s interests or the family’s interests. The nursing home’s employees are probably not going to show you all of your options in preserving assets, and some MassHealth assistance companies may be motivated to sell an annuity as part of their advice. (See Should You Prepare and File a MassHealth Application on Your Own? and also see Should a MassHealth Applicant Accept Help from the Nursing Home’s Lawyer to Appeal a MassHealth Denial?)
25. Retroactivity of MassHealth. MassHealth benefits can be made retroactive to the first day of the third month before you applied, as long as you met the financial requirements at that earlier time. (See Applying and Appealing to Receive Retroactive Medicaid Benefits in Massachusetts)
26. MassHealth Denial. The retroactivity of the MassHealth application is at stake if you do not appeal a MassHealth denial. For that reason, every MassHealth denial should be appealed. MassHealth eligibility workers are overworked, and can make mistakes that can be rectified by a hearing officer at a fair hearing. (See Should an Appeal Be Filed If a Denial for MassHealth Long Term Care Is Received?)
27. Fair Hearing. If you receive a MassHealth denial for any reason, you are entitled to challenge the denial by requesting a “fair hearing.” You have the right to due process, but it is sometimes an open question as to whether the hearing is actually fair, especially where hearing officers allow MassHealth to keep you in the dark about the reasons for the denial until the hearing has already begun. (See What Is a Fair Hearing under MassHealth, and Can You Really Expect It to Be Fair?)
28. Estate Recovery. After you have established eligibility, MassHealth is usually treated as a gift to you that you do not have to repay. If, however, you end up dying and having any assets go through probate, MassHealth can end up being a loan repayable to the Estate Recovery Unit at MassHealth. Any assets that you were allowed to keep during the MassHealth application process, including your home, can get scooped up by estate recovery. (See What Is Estate Recovery by MassHealth?)
29. Long Term Care Insurance. Long term care insurance proceeds are treated as the MassHealth applicant’s income. As long as two key questions on the MassHealth application are answered correctly, any long term care insurance policy can preserve a MassHealth applicant’s home as an asset during the application process and also from post-death estate recovery claim.
30. MassHealth Liens. Sometimes, MassHealth places a lien on real estate that is owned or partially owned by a MassHealth applicant. When the MassHealth recipient returns home or dies, the lien is removed, and only the estate recovery laws apply at that point. (See When Is a Lien Placed on a MassHealth Applicant’s Home and What Does the Lien Do?)
31. Life Estates Have Floating Values. When a life estate is sold, the life tenant is required by MassHealth to receive fair market value for the sale. The value is based on the life tenant’s age, and the prevailing interest rates. (See How Does MassHealth Treat a Sale of a Life Estate in 2014?) Unfortunately, as part of the overbroad attack now being made on trusts by MassHealth lawyers, a life estate in a trust is being treated as though the MassHealth applicant owns the entire trust, not just the life estate value.
32. Exceptions and Changes. Federal Medicaid laws and MassHealth regulations cover hundreds of pages and are constantly changing. Everything above does not cover the many exceptions that exist, and is meant to be a quick summary of major points as of the publication date. Expect ongoing changes in laws, regulations and unwritten policies, and do not rely on anything that well-meaning friends tell you about the MassHealth application process.