The Deficit Reduction Act of 2005 was enacted
on February 8, 2006. On July 1, 2006, the Commonwealth of Massachusetts enacted the new regulations. These regulations state that they will be applied retroactively and will affect
individuals that have transferred assets since February 8, 2006. For information on the new Massachusetts regulations click the Mass Health Regulations.
Question: Will I be eligible for Medicaid if I transfer my assets?
The transfer of assets will create a Medicaid disqualification period. This period is determined by dividing the value of
the property transferred by an amount equal to approximately $300 per day (this amount changes each year) or $9,300 per month,
which is the Commonwealth's estimate of the average monthly cost of private nursing home care. For example, if $60,000 was
transferred to a child, the transferor would not be eligible for Medicaid until the expiration of approximately 200 days.
The regulations biggest change is to delay the beginning date for a period of ineligibility due to a transfer
of assets from the first day of the month in which the transfer occurred to the date on which the nursing home resident would
otherwise be eligible for MassHealth had he not made the transfer – in other words, the date on which he has spent down
to $2,000. The new regulations implement this change with the following sentence:
"For transfers occurring
on or after February 8, 2006, the period of ineligibility will begin on the first day of the month in which resources were
transferred for less than fair-market value or the date on which the individual is otherwise eligible for MassHealth payment
of long-term-care services, whichever is later. 130 CMR 520.019(G)(3)".
Unfortunately, this restatement of
the regulations leaves many questions unanswered. For instance, how does one establish that he is “otherwise eligible
for MassHealth”? Will this require an application in every case to start an ineligibility period due to a transfer?
Must one be “otherwise eligible” throughout the penalty period, or simply at the beginning to get the penalty
These and other questions will be answered either when revised regulations are issued after August
1st or over the course of the next several years as the Office of Medicaid responds to actual cases involving these issues.
With proper planning, however, the maximum Medicaid disqualification period will not exceed 60 months even if a large
amount of assets are transferred to an individual. It is extremely important, however, that you do not apply for Medicaid
until 61 months after the date of the transfer. Also, you may consider the wild-card disabled child and caretaker child exceptions
to avoid any penalty!
does the 60 month look back period work?
There is a 60 month look back period when making transfers to any
other individuals beside your spouse. There is also a 60 month look back period if the transfer is to a trust.
How do I handle the ownership my home?
Under the new Deficit Reduction Act of 2005, you will be forced to
use home equity to pay for Medicaid if such home equity is above $858,000 (2018 indexed for inflation). However, the new regulations
also included a provision exempting over-equity homes where undue hardship will occur. Undue hardship was defined as existing
where (1) the denial of long-term-care services deprive the applicant of necessary medical care, food, shelter, clothing,
or other necessities of life, (2) the nursing facility is threatening discharge, and (3) there exists no less costly noninstitutional
alternative. 130 CMR 520.007(G)(13).
Question: What happens if my spouse goes into a nursing home?
If you or your spouse is admitted to
a nursing home, the at-home spouse may retain assets not to exceed $123,600 (updated 2018). You will
be told that you must spend the excess of your countable assets. This information is incorrect. You do not necessarily need
to spend this amount and there are planning opportunities which will protect these assets from the cost of long term care.
The first technique involves the use of an annuity. Once the amount of excess resources are determined, this amount
should be transferred to the "community" (or stay-at- home) spouse who is then permitted to annuitize this over
a period not to exceed the life expectancy of the community spouse. The institutionalized spouse then will be eligible for
Medicaid immediately. However, under the new Deficit Reduction Act of 2005, the beneficiary of the annuity will have to be
the Commonwealth of Massachusetts. As such, we want the annuity purchased to be a short as possible.
If my spouse enters a nursing home, does
the healthy spouse get to keep his/her own income? or any of the institutionalized spouses income?
rule is that the healthy spouse may keep all of his /her income. In addition, the Division of Medical Assistance required
that the healthy spouse have income at least equal to what the Division of Medical Assistance refers to as the Minimum Monthly
Maintenance Needs Allowance (MMMNA). This amount is currently $2,030.00 (updated 2018) per month. In the event that the healthy
spouses' income is below this MMMNA then the healthy spouse may request a fair hearing in an effort to either have some excess
assets or at least some of the institutionalized spouse's income allocated to the healthy spouse in an effort to increase
the healthy spouse's income to the MMMNA.
Question: Should I hire an Attorney to help me complete and file my medicaid application?
Yes, Medicaid is a very complicated area of the law. There is a wide range
of statutes, rules, and regulations that govern the Medicaid program. These laws and rules change over time. Also, the Federal
laws are combined with each state’s laws resulting in rules that are different in each state. An Attorney can
- Plan for long term care costs
- Understand the eligibility requirements
- Determine if
Medicaid is needed, and if so, complete and file an application correctly and timely
- Follow through with all necessary
legal steps and improve your chances of receipt of Medicaid assistance.
Question: If I am still
healthy, can I Protect my assets from a nursing home legally?
Yes, please review the Irrevocable Trusts section of our web page.
We Offer A FREE Consultation to
discuss your Medicaid Situation or Nursing Home Planning. To Schedule a consultation call 508-230-5777, or click here.