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The Massachusetts Legislature Has Prohibited MassHealth Estate Recovery Against Trusts, and Therefore Knows About But Has Not Prohibited Their Use

May 18, 2014

Under federal Medicaid law, one state option available since 1993 has been to make post-death claims for estate recovery against trusts. In 2004, the Massachusetts legislature voted overwhelmingly not to allow estate recovery against trusts. Thus, the governmental branch in charge of changing laws in Massachusetts has not legislatively expressed its concern about the use of irrevocable trusts to qualify for MassHealth.

Current MassHealth regulations require recovery from the probate estates of MassHealth members who received Medicaid while age 55 or over and those who, regardless of age, received Medicaid while institutionalized. All MassHealth expenses incurred for such members, with certain exception, are counted toward the total recovered amount. An exception from estate recovery is made in cases where recovery would cause hardship, and only partial recovery is required from the estate of members who had long-term care insurance policies that met the Massachusetts Division of Insurance requirements. Estate recovery is deferred while there is a surviving spouse or child who is blind, permanently and totally disabled, or under age 21.

In 2004, the Massachusetts legislature was presented with voting on the option, allowed to the states by federal Medicaid law since 1993, of allowing estate recovery against trusts. The bill it passed limited estate recovery to the probate estate, but was vetoed by Governor Romney. The Massachusetts legislature then voted to override the veto, unanimously in the House and with only one dissenting vote in the Senate. The existing law, M.G.L. c. 118E, s. 31(c), does not allow estate recovery against any trusts and shows that there is no Massachusetts legislative policy against trusts in the MassHealth context.

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