MassHealth currently accounts for approximately 29% of the Massachusetts budget. Three out of every five people over the age of 65 in America today will require long-term care at some point in their lives. According to the 2010 census, 13% of the United States population is age 65 or older. Long-term care is clearly a pressing concern.
There are three means for paying the cost of long-term care:
- Long-term care insurance;
- Medicaid; or
- Private payment.
For many the private pay option often is not viable. For those individuals who cannot afford or qualify for long term care insurance, the answer is Medicaid.
Medicaid Qualifications – Assets
For an individual to qualify for Medicaid in Massachusetts there are certain asset limitations that must first be met. A single applicant cannot have greater than $2,000 in “countable” assets. In cases where the Medicaid applicant (the “applicant”) is married, the spouse not applying for Medicaid (the “community spouse”) is entitled to keep what is called the Community Spouse Asset Allowance (the “CSAA”), which is currently $113,640.
Only countable assets are considered in determining applicant eligibility. The best way to define countable assets is in the negative. Countable assets include everything that are not “non-countable.” Non-countable assets are as follows:
- The home and related personal property if located in Massachusetts and used as the principal place of residence.
- Business and non-business property essential to self-support.
- Loans or grants the terms of which preclude their use for self-support (scholarships).
- Funeral or burial arrangements for the applicant and the community spouse.
- Special needs trusts and pooled trusts.
- One vehicle per household is non-countable regardless of value if it is for the use of the community spouse.
- Medicaid Qualified Annuities.
Countable assets are all the other assets that the applicant or the community spouse own or to which they would be entitled, whether or not actually received. Essentially, the state will take a “snapshot” of the couple’s countable assets on the date of the applicant’s entrance into the nursing home. If the couple has $150,000 in countable assets at the time of the snapshot, the applicant will be allowed to keep $2,000 and the community spouse will be allowed to keep $113,640. The remaining $34,360 will have to be “spent down” before the applicant will qualify for Medicaid.
Medicaid Qualifications – Income
In Massachusetts income is not a factor in determining eligibility. However, income remains an important consideration for the community spouse. The state will calculate the Minimum Monthly Maintenance Needs Allowance (“MMMNA”) for the community spouse; this is the amount of income that the Medicaid regulations deem the community spouse needs to survive. If the community spouse’s income does not meet this amount, the shortfall will be made up from the applicant’s income with the applicant’s remaining income paid to the nursing home. If the income of both the community spouse and the applicant do not meet the MMMNA, the community spouse can request a hearing to keep additional countable assets over the CSAA under the theory that these assets will be used to generate enough income to meet the MMMNA. It is important to note that the asset allowance is only increased if the income from both spouses fails to meet the MMMNA. If the income from both spouses meets or exceeds the MMMNA at the time of the application, there is no opportunity to keep excess assets and they must be spent down. The question remains, what happens if the institutionalized spouse dies and his or her income ceases. The community spouse will now not have enough income to meet the MMMNA, and not enough assets to generate the income to make up the difference.
Transfers of Assets
Transfers of assets by the applicant for less than fair market value can result in disqualifying the applicant from receiving Medicaid benefits for a certain period of time. The disqualification period is determined by dividing the amount transferred by the average monthly cost to a private patient receiving nursing home care in Massachusetts. The state currently sets the average rate at $8,333 a month, or $274 a day. So if a person makes a gift of $27,400, the applicant is disqualified from being eligible for Medicaid for 100 days. The kicker is that the disqualification period does not begin to run on the date of transfer, rather the disqualification period will not begin to run until the individual has made the gift, been admitted to a nursing home, applies for benefits and gets denied as a result of the initial gift. The problem here is that by the time all of these criteria are met the applicant only has $2,000 and has no means of paying for nursing home care for that 100 day disqualification period.
The way to deal with the disqualification period is through the look back rules. The state is only allowed to look at the applicant’s prior financial activities for a certain time. The maximum look back period is 60 months. In other words, an applicant could give away $1,000,000 and so long as a 60 month period has passed since the time of the gift, the gift would have no adverse consequences for qualifying for Medicaid. This does require a much longer planning window for ensuring Medicaid qualification.
This is clearly a brief overview of the Medicaid eligibility rules and there are many exceptions and exclusions that are not discussed. It is important that you discuss this with a qualified attorney with significant experience in the area before attempting to deal with Medicaid on your own. There are many traps for the unwary.