Nursing home care is the single largest out-of-pocket expense for seniors. Presently, the average cost of nursing home care in Massachusetts is between $90,000 and $110,000 per year. In most instances, MassHealth (Medicaid) is the primary insurance plan available to seniors to assist in meeting the costs of nursing home care. Medicare provides for very little long term nursing home care and private insurance often pays for even less. In rare instances, the Veteran’s Administration may defray some of the costs of long term care. Because MassHealth is a needs-based program, most seniors have to pay out-of-pocket for long term care until they become eligible for MassHealth benefits. To be eligible, you must demonstrate medical and financial need.
While Medicare is an entitlement program, MassHealth is a form of welfare which finances medical care for low income aged, blind or disabled persons. You must essentially become impoverished under the program’s guidelines in order to receive long term care MassHealth benefits. MassHealth currently provides no financing for assisted living for the vast majority of people and limited benefits for persons seeking in-home services.
Without proper planning, seniors can lose the bulk of their hard-earned savings paying for long term nursing home care. The following basic rules of MassHealth eligibility are important to know for persons requiring nursing home care now or in the future. The rules do not apply for persons living in the community or in assisted living. One important caveat to remember is that the MassHealth rules change frequently so you should not assume that the information provided in this article will be accurate indefinitely.
Clinical Eligibility Rules:
In order to be eligible for MassHealth benefits, the recipient must be screened and determined to be medically in need of long term nursing care services. The screening is generally initiated by the nursing home. To be medically eligible an individual must require at least one skilled service daily or must require assistance with at least three activities of daily living (including eating, dressing, bathing, transferring in and out of bed, and toileting), one of which must be a nursing service. If an applicant does not require at least this level of care, MassHealth will not pay for his or her nursing home expenses. However, the applicant can seek certification of his or her medical eligibility in advance of his or her application, or allow the state to determine whether he or she requires a level of care that they will cover at the time he or she applies for MassHealth.
Income Eligibility Rules:
When a person has been found eligible for MassHealth, all of his or her income (including pensions, Social Security, annuities, and rents), less certain deductions, must be paid to the nursing home for his or her care. These deductions include a $72.80-a-month “personal needs allowance”, a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance he or she may pay to the spouse that continues to live at home. The applicant is required to pay all remaining income to the nursing home. This payment is known as “the patient paid amount.” MassHealth then pays the balance of the applicant’s care costs.
If the nursing home resident is married, his or her spouse is entitled to keep all of his or her monthly income from all sources, regardless of the amount. The community spouse’s income may consist not only of regular Social Security and gross pension income but also the income being generated by the resources the community spouse is allowed to keep (CSRA).
The community spouse is also entitled to keep a share of the nursing home resident’s income if the spouse’s income is less than the spousal needs allowance established by MassHealth. This allowance is known as the Minimum Monthly Maintenance Needs Allowance (MMMNA) and is based on the community spouse’s housing costs. The MMMNA may range from a minimum of $1,822.00 to a maximum of $2,739.00 (2009 figures) except where the community spouse can prove that there are exceptional circumstances warranting a higher allowance or there is a Court order for support that exceeds the spousal needs allowance. If the community spouse’s own income falls below his or her established MMMNA, the shortfall is made up from the nursing home resident’s income. In some instances, the nursing home resident may also be allowed to keep income to support dependent children, parents or siblings. However, MassHealth will not allow a divorced spouse or children residing with a divorced spouse an income allowance of any amount.
Asset Eligibility Rules:
The assets of both spouses count in determining MassHealth eligibility for long term MassHealth benefits. MassHealth limits an applicant’s “countable” assets to $2,000 and presumptively limits those of the spouse remaining in the community to a maximum of $109,560 (2009 figures). This figure changes annually. “Countable” assets generally include all belongings except for:
(1) the applicant’s principal residence (if it is in Massachusetts) as long as the
equity in the home is $750,000 or less and the applicant intends to return home or his or her spouse or another dependent relative lives there,
(2) personal and household belongings, such as clothing, furniture, and jewelry,
(3) one automobile of any value if it is for the use of the eligible individual or a
couple or a member of the household of the eligible individual or couple,
(4) business and nonbusiness property essential to self-support,
(5) a family burial plot and other prepaid funeral and burial arrangements,
(6) life insurance if the face value is $1,500 or less (if the face value of the
policy or policies exceeds $1,500, the cash value of the policies will be
counted in determining MassHealth eligibility),
(7) a separate “burial account” of $1,500 of less plus accumulated interest.
(8) a pension fund that is being set aside by an individual’s current employer, and
(9) an annuity that cannot be converted to a lump sum provided that the
Commonwealth is named as the remainder beneficiary in the first position for at least the total amount of medical assistance paid on behalf of the annuitant or in the second position after the spouse, minor or disabled children. The term of the annuity must also have a guaranteed number of years of payment equal or less than the annuitant’s life expectancy as determined by the Social Security Administration, must allow a total payment to the annuitant equal to or greater than the annuity’s purchase price, and must be irrevocable and not assignable.
If an asset is in joint names with someone else, the ownership interest deemed to the applicant for MassHealth purposes depends on the type of asset. All assets held in joint bank accounts are presumed to belong solely to the MassHealth applicant. Other property held jointly, such as stocks, bonds, mutual funds and real estate, are deemed to belong to the applicant in proportion to the number of owners. These deeming rules are presumptions and may be rebutted by with evidence of different ownership interest or contribution by the joint owner who is not a spouse and who is not applying for MassHealth. These rules are also largely irrelevant where there is joint ownership by a husband and wife, because all assets are counted in determining one spouse’s eligibility.
A person’s home is a noncountable asset if it is used as a principal place of residence, provided that the value is less than $750,000) as long as (1) the applicant intends to return home, (2) the applicant has long term care insurance that meets minimum state requirements as of the date of admission, or (3) one of the following individuals resides in the home:
(a) a spouse,
(b) a child who is blind, disabled or under the age of 21,
(c) a child of the MassHealth applicant who was living in the house for at least two years prior to the applicant’s institutionalization and who, during that period, provided such care that the applicant did not need to move to a nursing home,
(d) a sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home,
(e) a dependent relative; or
(f) a joint owner who will lose housing if the home is sold.
These rules exempting the home do not apply, however, to a principal place of residence held in a revocable trust. In order for the home to be excluded, it must be transferred out of the trust.
If none of the above exceptions or conditions apply, the applicant’s home will be a countable asset. The applicant will be required to execute an agreement to sell the home for fair market value to finance his or her long term care. For a period of nine months, the applicant will qualify for MassHealth benefits provided he or she makes a “good faith effort” to sell the home. Once the home is sold, the proceeds will count and will, therefore, cause a MassHealth disqualification until the funds are spend down.
Further, if a MassHealth recipient owns countable real estate, Medicaid has the right to record a lien against the property to be reimbursed for medical expenses paid on his or her behalf if the real estate is sold prior to the recipient’s death. The debt to MassHealth accrues at the rate at which MassHealth pays for care rather than the private pay rate.
Transfer Penalty Rule:
The enactment of the Deficit Reduction Act of 2005 (DRA), signed into law on February 8, 2006 drastically restricts the ability of an elder to transfer assets before qualifying for MassHealth coverage for nursing home care. The DRA applies to all transfers made on or after the date of enactment, February 8, 2006. Any transfers made before February 8, 2006 fall under the old transfer rules. The following explains the only rules after the enactment of the DRA.
With certain exceptions, Massachusetts imposes a period of ineligibility for any transfer of a countable asset or principal place of residence for less than fair market value within five years of applying for MassHealth (the look-back period). If an applicant or his or her spouse transfers such assets, he or she will be ineligible for MassHealth for a period beginning when the applicant is admitted into the nursing home and eligible for benefits but for the transfer. In other words, the DRA begins the period of ineligibility at the time (1) the transferor has moved to a nursing home, (2) has spent down to the asset limit for Medicaid ineligibility, (3) has applied for Medicaid coverage, and (4) has been approved for the coverage but for the transfer. This means that the penalty period does not even begin until the applicant is in the nursing home and otherwise eligible for MassHealth benefits. The applicant or his or her family would have to pay privately for long-term care services during this period of ineligibility.
The period of ineligibility is the number of months calculated by dividing the value of what was transferred by the average monthly cost of nursing home care. The current figure used by Massachusetts is $8,010 (2009 figures). This figure is adjusted annually.
If an applicant receives fair market value (that is, the funds must be used for the purchase of services or goods for personal use which are actually worth the amount paid) for the asset transferred, then the transfer is not disqualifying. Asset transfers that generally are not disqualifying include:
(a) payments in exchange for the discharge of a legally enforceable debt,
(b) Prepay taxes, insurance, medical, nursing, legal or accounting fees, including
payment of a retainer to an attorney toward anticipated future services,
(c) Pay off existing credit card bills and other debts for goods and services previously purchased for fair market value,
(d) compensation paid to someone other than a legally responsible person for care provided, so long as there was a mutual understanding that the services were being provided in exchange for compensation,
(e) the purchase of an annuity that is actuarially equal in value to the purchase price unless (1) the beneficiary is not the MassHealth applicant or spouse or (2) the payments are expected to last beyond the life expectancy of the annuitant. Unless the purchase of the annuity is married or has a minor or disable child, the annuity must name the Commonwealth as the remainder beneficiary,
(f) the purchase of a life estate in another individuals’ home provided that the purchaser resides in the property for at least one year after purchase, and
(g) a loan whose note’s repayment terms are “actuarially sound” and the payments are made in equal installments.
There are also some significant exceptions to the transfer rules. No ineligibility period is imposed for assets transferred to:
(1) a spouse,
(2) a blind or disabled child,
(3) a trust for the benefit of a blind or disabled child,
(4) a trust for the benefit of a disabled individual under the age of 65, and
(5) a pooled trust for disabled beneficiaries managed by non-profit organizations.
There are also special rules that apply with respect to the transfer of a home. In addition to the exceptions described above, the home may also be transferred without penalty to:
(1) a child under the age of 21,
(2) a sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home, and
(3) a child of the applicant who was living in the house for at least 2 years prior to the applicant’s institutionalization and who, during that period, provided such care that the applicant did not need to move to a nursing home.
An ineligibility period can be shortened or eliminated by returning the transferred asset, if possible, to the applicant for MassHealth.
Under the MassHealth rules, the spouse of a nursing home resident (referred to as the “community spouse”) is afforded special protections. In order to avoid spousal impoverishment, the community spouse is entitled to keep a maximum of $109,560 (2009 figures), which is referred to as the community spouse resource allowance (CSRA). This amount is not affected whether the assets are jointly held by the couple or they are all in the name of the nursing home spouse. The institutionalized spouse becomes eligible for MassHealth when the combined assets for both spouses equal the CSRA plus the $2,000 the institutionalized spouse is allowed to keep.
The Probate Court or MassHealth, under certain circumstances, may permit a higher CSRA. For example, where the where the couple’s combined income is less than the established minimum monthly maintenance needs allowance (MMMNA), the community spouse can petition for an increase in the CSRA so that additional funds can be invested in order to generate income to make up the shortfall. This permits the low income community spouse to retain a substantial level of savings above $109,560 (2009 figures), while maintaining eligibility for the institutionalized spouse.
Although the amount of assets a community spouse is entitled to keep is limited, his or her income will continue undisturbed as stated previously. Further, if the spouse’s assets increase after the institutionalized spouse is approved for MassHealth benefits, the community spouse will not be required to spend down those excess assets on the institutionalized spouse’s care.
MassHealth’s Right to Recovery
In some circumstances, MassHealth is entitled to recover its costs in paying for the recipient’s care. This right applies only to the extent that MassHealth has paid for any services after the recipient reached the age of 55 (including home and community based care) or for services provided in a nursing home, hospital or other medical institution at any age. MassHealth may secure a lien against a living MassHealth recipient’s principal residence (depending upon who continues to reside in the home) and any other parcels of real estate in which the recipient has an interest. If the real estate is sold while the MassHealth recipient is living, the lien will insure reimbursements for the medical services provided.
When a MassHealth recipient dies, MassHealth’s right of recovery is limited to the recipient’s probate estate (i.e. property in the recipient’s name alone). MassHealth will file an estate recovery lien against the probate estate, which may include the recipient’s principal residence. Under current regulations, property in joint names, in trust or in a life estate generally passes outside the probate estate and would be exempt from MassHealth’s right to recover.
Massachusetts will not seek estate recovery against the principal residence of MassHealth recipients who owned long term care insurance, provided that the policy meets certain requirements of the Division of Insurance. In order to avoid estate recovery, the recipient must have a certain level of benefits available to pay for nursing home care as of the day he or she entered the nursing home. One important caveat to remember is that although the long term care insurance policy may meet the minimum coverage requirements at the time it is purchased, the policy may not meet the minimum coverage requirements on the day the recipient enters the nursing home. For instance, depending on the original maximum benefit, if the recipient uses the policy to pay for non-nursing home benefits (e.g., home health care, personal care or assisted living benefits), the amount of benefits remaining available to pay for nursing home care may be less than what is necessary to meet MassHealth’s minimum coverage requirements on the day the recipient enters the nursing home.
The MassHealth Application:
The date that a signed, dated and “complete” MassHealth application is received by the MassHealth office is deemed to be the date of application. Eligibility for benefits may be allowed retroactive for up to three months if the applicant would have been eligible for MassHealth during that time. Thus, if an applicant filed his or her application on September 28, 2010, the applicant may request coverage back to July 1, 2010, if he or she was eligible to apply as of that date.
The verifications required for MassHealth coverage is extensive. It can often be a daunting task to collect all of those verifications. Not only does MassHealth require proof of current facts but often also all transactions dating five years prior to application date. An applicant who has destroyed or misplaced bank records can download a form to get bank records at no cost from the MassHealth website.
Often, the caseworker who screens the application requests additional verifications following the initial submission. The applicant is generally given 30 days to respond to the request for further verifications and MassHealth must make a decision within 45 calendar days of the application date. If an application is denied for failure to provide additional verifications and within 30 days the applicant submits any of the missing verification, the date of receipt of the missing verification is considered the reapplication date. If the applicant fails to furnish all requested verifications within the 30 day period following the reapplication date, the reapplication will be denied and a new application will need to be filed.
If an applicant or recipient wishes to appeal a decision, a request for a hearing must be filed with the Board of Hearings within 30 days of the date the applicant received the denial notice. If an applicant files an appeal within 30 days of receiving a denial for failure to provide additional verifications, submits the missing verifications within the time frame, then the original application date may be preserved.
MassHealth will also annually review the recipient’s financial eligibility for long term care benefits. If the recipient is married, MassHealth is not entitled to review the community spouse’s income or assets in determining the recipient’s continuing eligibility.
It is important to remember that nothing in this field is absolutely certain or insulated from further legal change. Before submitting an application for MassHealth benefits, you should speak with a qualified elder law attorney to help navigate you through this often tedious and cumbersome process.
36 North Bedford Street, East Bridgewater, MA 02333
Phone: (508) 350-0120 Fax: (508) 350-0121