In some circumstances, MassHealth is entitled to recover the amount of benefits paid for a recipient’s medical care. This right applies only to the extent that MassHealth has provided medical services after the recipient reached the age of 55 or for services provided in a nursing home, hospital or other medical institution at any age.
MassHealth Lifetime Lien
MassHealth may secure a lien against a living MassHealth recipient’s principal residence and any other real estate located in Massachusetts in which the recipient has a legal interest. (i.e, the recipient is the sole owner of the property, he or she owns it jointly with another, or he or she owns a life estate in the property), with certain exceptions. This lien gives MassHealth authority to recover payments for a recipient’s medical expenses if the property is sold while the recipient is living.
A lien may not be placed on the property of a MassHealth recipient if a protected relative lives in the home – a spouse, a child under the age of 21, a blind or permanently disabled child of any age, or a sibling with a legal interest in the property who has lived in the house for at least 1 year prior to the recipient’s admission to a medical institution. The MassHealth recipient may transfer his or her ownership interest in the property to that protected relative without penalty. That is, the transfer will not adversely affect the recipient’s eligibility and the State will be prevented from any future estate recovery on the property.
If the home is not occupied by a protected relative, a lien may not be placed against the property if the institutionalized recipient is expected to return home within 6 months. In this instance, if the recipient indicates on the MassHealth application that he or she intends to return home, MassHealth will mail a form to the recipient’s physician asking if there is a reasonable expectation that the recipient will return home within the following 6 months. If the physician answers affirmatively, no action is taken. However, MassHealth will review the recipient’s status after 6 months and, if the recipient is still institutionalized, ask his or her physician to complete another form assessing whether there is a reasonable expectation that the recipient will return home at that time.
If the physician’s assessment is that the recipient is not expected to return home within 6 months, a notice is mailed to the applicant of MassHealth’s intent to file a lien against the property unless that determination is appealed.
No lien is placed against the property if the MassHealth recipient indicates on the application that he or she does not intent to return home. The property will then be counted as an asset for purposes of MassHealth eligibility. However, its value is disregarded for up to 9 months, provided that the recipient signs an agreement to sell the property for fair market value.
Presence of the lien will insure reimbursement for the medical services provided if the property is sold or transferred during the MassHealth recipient’s lifetime. No sale or transfer can be completed until the MassHealth lien is either paid or the lien is released without payment. This prevents MassHealth recipients from giving away the property in which they no longer reside before its equity can be used to offset long-term care expenses paid on their behalf.
At a real estate closing, the amount of the lien is indicated on the HUD Settlement Statement and must be paid as a condition of sale or transfer. If the lien is greater than the sale amount, a reduced amount will be accepted to satisfy the lien. However, any outstanding mortgages, taxes, amounts due to public utilities, and child support arrears are paid before MassHealth’s is entitled to recover, which may further reduce the amount recovered.
The lifetime lien is no longer valid when the Masshealth recipient is deceased. Masshealth must release the lien after they have received notification of the member’s death and a copy of the death certificate.
Estate Recovery Rules
When a MassHealth recipient dies, MassHealth’s right of recovery is limited to the recipient’s probate estate. A probate estate includes property that a person possesses at the time of death in his or her name alone. Under current Massachusetts 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. The probate estate may include real property on which a lifetime lien was filed. However, the lifetime lien is no longer valid after the recipient’s death and must be released upon the request of the Administrator or Executor.
Pursuant to Massachusetts law, a copy of any petition to probate a decedent’s will or for administration of a decedent’s estate must be provided to MassHealth’s Estate Recovery Unit, along with a copy of the death certificate, regardless of whether the decedent received MassHealth benefits. Upon notification of a person’s death, the Estate Recovery Unit will file a Notice of Claim against the recipient’s probate estate to recover any payments made on behalf of the recipient for medical benefits. The Executor or Administrator has 60 days from the date the Notice of Claim was filed in the Probate Court to object to the validity of the claim or request a waiver or deferral of the claim.
A waiver may be granted if hardship can be established. Hardship waiver is available if a sale of real property would be required to satisfy a claim against the recipient’s probate estate and the individual using the property as their primary residence (1) lived on the property for at least one year before the deceased recipient became eligible for MassHealth; (2) the individual inherited or received an interest in the property from the deceased member’s estate; (3) the individual is not being forced to sell the property by other heirs; and (4) the individual’s income is less than 133% of poverty level. Documentation must be provided to MassHealth to demonstrate that all of the hardship waiver requirements are met. This grant of waiver is conditional for a two-year waiting period. If these waiver requirements continue to be met during the two year period following the conditional waiver, (i.e. the individual’s income is below the poverty level and the property remains unsold, not transferred and used as the individual’s principal residence), recovery is then permanently waived.
A deferral may be granted if there is a surviving spouse or dependent relative (i.e., a child who is blind, permanently and totally disabled, or under 21 years of age). This deferral will last until the death of the spouse or loss of exempt status of the dependent relative.
If no request is made to object to the validity of the claim, waive or defer recovery within the 60 day period, payment is expected in full. If appropriate documentation is provided to prove that the estate contains insufficient assets to pay the claim in full, the Estate Recovery Unit will accept less than the full claim amount. In such cases the Estate Recovery Unit will request asset information to determine the value of all the assets owned by the decedent. If the estate includes real property, the fair market value of the property must be established. The Administrator or Executor may do so by submitting copies of the current tax bill or most recent tax assessment showing the assessed value of the property and a written appraisal of the fair market value of the value from a knowledgeable source, such as a real estate broker, certified appraiser, or official from a bank or savings and loan association. Once the total value of the real estate and other property has been established, all allowable expenses are deducted from that amount and the remainder must be paid to MassHealth.
Interest on the estate recovery claim begins to accrue 6 months after the appointment of the Executor or Administrator at a rate of 12% per annum. On rare occasions, if the Executor or Administrator refuses to settle the claim, the Estate Recovery Unit may file a motion in court to compel payment.
One final note, MassHealth 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. In order to avoid estate recovery, the recipient must have (1) been institutionalized; (2) notified MassHealth that he or she has no intent of returning home; and (3) had 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.
Tags: estate planning