Last Minute Elder Law Strategies: Qualifying for MassHealth

The most frequently asked question for an elder law attorney is “How can I qualify for MassHealth to pay for nursing home expenses?” The answer depends on how much time you have to prepare. If you are planning 5 years ahead or more, consider a LAST trust, an irrevocable trust that protects your estate against nursing home spend-down. If you need last minute elder law advice, read on for some useful strategies.

It is often a stressful and confusing time for loved ones when a spouse enters a nursing home. A contributor to this stress is when many people discover that Medicare may not cover the cost of nursing home care. Even if Medicare does cover the cost of nursing home care, the coverage is limited to a maximum of 100 days. In 2023, the average cost for a nursing home stay is $12,000 a month, which is $144,000 a year. For many, if this is paid to the nursing home, the spouse in the community is impoverished quickly.

That being said, there are options for protecting assets for the spouse in the community and qualifying for the MassHealth program (Medicaid in Massachusetts). That’s why it’s essential for the family to meet with an elder law attorney promptly upon such a nursing home admission. The MassHealth program is designed to assist with the cost of the nursing home for many individuals. 

To qualify for MassHealth benefits, the couple’s “countable” assets must be less than roughly $150,000. Thankfully, the primary residence and one vehicle, including a few other protected assets, are not considered “countable.” So what is included? Some “countable” assets are:

• Retirement accounts
• The cash value of life insurance policies
• Annuities
• Bank accounts

When all of these are combined, many families appear to exceed the asset limit. But there are options for families to overcome that initial assessment.

How families qualify for Medicaid

An elder law attorney can help identify and implement options that lead to MassHealth qualification. Do countable assets have to be spent down to $150,000 before the spouse in the nursing home is eligible for MassHealth? Simply, the answer is no. One strategy is to transfer assets between spouses since there is no transfer penalty.

When a couple is looking to qualify the spouse in the nursing home for MassHealth benefits, all assets should be transferred to the spouse in the community. Under current MassHealth regulations, the spouse in the community can then purchase a Medicaid-qualifying annuity. This type of annuity is not a traditional retirement annuity, and it’s essential that the spouse in the community work with an elder law attorney to ensure the correct type of annuity is purchased.

How does a Medicaid-qualifying annuity work? 

The spouse in the community consolidates all of the assets and purchases the annuity, except for about $150,000. The annuity’s term must be less than the spouse in the community’s life expectancy based upon specific life-expectancy tables. Each month of the annuity term, income will be paid to the spouse in the community until they receive the total amount deposited into the annuity back. Certain provisions must be included in the annuity, but that’s generally how the Medicaid-qualifying annuity works. 

An essential point to keep in mind is that if the community spouse dies before the nursing home spouse, any remaining balance in the annuity will be paid to the Commonwealth for the amount expended on behalf of the nursing home spouse. Once the funds are deposited in the annuity and the balance across all countable assets is less than $150,000, the spouse in the nursing home should be financially eligible for MassHealth.

Learn how one family with nearly 1 million in assets qualified for Medicaid in this related case study. They accomplished this within the 5-year lookback period (the timeframe that the state looks at to determine if there are any disqualifying transactions or resource transfers).

What’s the most important takeaway? 

Families facing the cost of nursing home care have options, a first assessment of ineligibility may not be the complete story, and a skilled elder law attorney can both preserve assets and the quality of care for loved ones.

If you have a spouse or family member requiring nursing home care and are interested in exploring MassHealth options, we welcome you to book a free 15 minute appointment with one of our experienced paralegals.