| Massachusetts Long Term Care & Medicaid frequently asked questions answered by Attorney Stephanie Konarski
What options do I have for long term care? What is Long Term Care insurance? How much does long term care insurance cost? Do I need to protect my assets if I have Long Term Care insurance? What if I do not qualify for Long Term Care insurance or it is too expensive? What is the cost of nursing home care? Won't Medicare pay for nursing home care? Won't my health insurance cover the cost of the nursing home? If Medicaid pays for my care will I be in a poor quality nursing home? How much money can I have and still qualify for Medicaid? What does it mean to spend-down assets? Will I have to sell my house to pay for nursing home care? How are the assets of a husband and wife counted? If my spouse requires Medicaid, will I lose all of my assets? What is the "look-back period"? Can I transfer assets to make myself eligible for Medicaid? Can I still give $12,000.00 a year away? What are some options for protecting my home and assets if I need to apply for Medicaid? How long is the penalty period? Do I get to keep my income if I am on Medicaid? What happens to my spouse if I need Medicaid and his or her income is significantly less than mine? Is my spouse required to pay for my nursing home care?
What is long-term care?Long term care is care provided to persons with long term diseases or disabilities, and includes health and social services, rehabilitative, skilling nursing, and other supportive care of supervision provided over an extended period of time. The goal of long term care is to help people with disabilities be as independent as possible.
What options do I have for long term care?There are a number of options available for long term care depending on your medical condition and location.
What is Long Term Care insurance?Long term care insurance (LTCI) is designed to pay for custodial long-term care services required due to a chronic illness or a condition lasting a prolonged period of time. This type of insurance covers skilled care and, more importantly, custodial care or personal care – i.e., when a person needs assistance with certain daily activities such as bathing, dressing and eating. LTCI is not designed to cover acute care services or to be a substitute for Medicare, Medigap or senior HMO plans. Long-term care can be provided at home, in the community, in assisted living facilities or in nursing homes.
How much does long term care insurance cost?The cost of the insurance will vary significantly, depending upon the type of insurance you purchase, your age and medical status at initial purchase, the amount of the nursing home benefit, the percent of home/community-based benefits, the duration of the policy, and the length of the elimination period (the deductible paid for by the policyholder before the policy starts to pay out). If you purchase a "tax-qualified" policy, however, the premiums are tax-deductible to the extent that you spend in excess of 7.5% of your adjusted gross income on medical expenses.
Do I need to protect my assets if I have Long Term Care insurance?A person may be exempt from Medicaid's recovery rules if he or she purchases a long term care policy that meets certain specific minimum requirements. The minimum requirements for a policy to satisfy the Medicaid exemption rules include the following: (1) the policy must cover nursing and custodial care in a nursing facility licensed by the Massachusetts Department of Public Health; (2) the policy must have available benefits of at least $125 per coverage day in a nursing facility; (3) the policy must have benefits sufficient to cover two years in a nursing facility; and (4) the elimination period may not be longer than one year. For example, if you bought a three-year policy and use one-and-a-half years worth of benefits at home before going to a nursing home, the MassHealth Recovery Exemption will not be available, because you will not have two years' worth of benefits in your policy when you enter the nursing home. Even if you have such insurance, however, you should still consult with an Elder Law attorney. Commonly, we find the policy is insufficient to pay for the daily cost of care even when combined with your income. If your policy only covers a short time period and your assets will then be exposed, additional asset protection planning may be necessary.
What if I do not qualify for Long Term Care insurance or it is too expensive?If this is the case, you should meet with an Elder Law attorney to discuss options for protecting your assets since Medicaid may be your only option to pay for long term care.
What is Medicaid Planning?Medicaid Planning helps individuals facing nursing home care protect their hard earned assets. Nursing home care is expensive and can often deplete an individual's entire life savings.
What is the cost of nursing home care?In Massachusetts, nursing home care costs between $90,000 up to about $120,000 per year.
Won't Medicare pay for nursing home care?Medicare will only pay for a maximum of 100 days in the skilled nursing facility if you meet certain requirements. You must have moved to the nursing home within 30 days of the hospital discharge and the hospital stay must have lasted at least three (3) days. Also, if you receive a skilled level of care, Medicare will pay completely for the first twenty (20) days. For days twenty-one (21) through 100, they will pay less a co-payment, which is set each year. In most situations, people receive less than the full 100 days of benefits. After that point, you either have to pay privately with your own funds or obtain Medicaid eligibility.
Won't my health insurance cover the cost of the nursing home?Private health insurance usually does not pay for extended nursing home care. Only policies purchased specifically for long term care needs cover nursing home costs.
How does Medicaid work?Medicaid will pay for nursing home care only for those who meet the financial and medical eligibility requirements. You will not receive coverage unless the Division of Medical Assistance (DMA) determines that the applicant's medical condition requires nursing home care and the applicant is sufficiently impoverished under the Division's guidelines. As part of the application process, the nursing home will complete a questionnaire showing whether the applicant requires at least one skilled nursing activity and help with at least three activities of daily living. "Activities of daily living" are routine self-care tasks such as bathing, dressing, grooming, transferring oneself to and from a chair or bed, eating, and toileting.
How do I get Medicaid?Obtaining Medicaid is a complicated application and eligibility process. A knowledgeable Elder Law attorney is aware of all the intricacies of Medicaid law can show you the best way to protect your assets and can take you through the maze of Medicaid requirements.
If Medicaid pays for my care will I be in a poor quality nursing home?No. Today, you can receive care at highly rated facilities regardless of whether you pay privately or by Medicaid.
How much money can I have and still qualify for Medicaid?An unmarried individual seeking coverage for nursing home long term care must have $2,000 or less in countable assets. If you have more than $2,000, an Elder Law attorney can advise you on how to spend down your excess resources in the most beneficial way. A married individual seeking nursing home coverage must have $2,000 or less in countable assets also to qualify for nursing home long term care. However, his or her spouse is entitled to keep up to approximately $109,000 (in 2009). If the couple's assets exceed this amount, we can often take steps to protect excess assets. Even when the couple's assets are below $109,000, it is important to meet with an Elder Law attorney to ensure your assets are protected.
What does it mean to spend-down assets?In order to qualify for Medicaid benefits, an applicant must spend down his or her assets to the allowable limit. Certain allowable non-countable transfers may be made for the purchase of services or goods for personal use for fair market value, creation of a supplemental needs trust for a disabled adult child, payment of legally incurred debts, or for certain other expenses expressly allowed in the Medicaid regulations. The following are commonly allowed non-countable transfers that will not affect Medicaid eligibility:
Will I have to sell my house to pay for nursing home care?No, in most cases, you do not need to sell your home to pay for nursing home care. However, the Division of Medical Assistance may place a lien on the property to recover what they paid out for your Medicaid costs.
What is a Medicaid Lien?A lien is the legal right to hold an interest in the property of another until some debt is paid. Federal and state law allow Medicaid to place a lien on the homes of persons who received long term care Medicaid benefits or who received Medicaid benefits on or after his or her 55th birthday to recover what they paid out for care. The Division of Medical Assistance may place a lien on the house during the applicant's lifetime. This lien will prevent a subsequent transfer or conveyance o the residence without first reimbursing Medicaid for the money it has expensed for that resident's care. The Division of Medical Assistance can also make a claim against the probate estate of the deceased applicant for reimbursement for the amount of Medicaid benefits paid. Medicaid cannot file a claim is there is a surviving spouse, an unmarried child younger than 21 or a blind or totally disabled person living in the home.
How are the assets of a husband and wife counted?The assets of both husband and wife are considered together. All of the countable assets owned by either spouse are totaled as of the first day one spouse enters a hospital or nursing home for long-term care. The total assets are then divided equally between them. The spouse at home ("community spouse")is permitted to retain a maximum of $109,000 in the year 2009. This amount changes every year. It may be possible for the community spouse to obtain additional assets through a court order or an administrative hearing decision. In addition, assets received by the community spouse after Medicaid qualification have no effect on the nursing home spouse's continued eligibility for Medicaid.
If my spouse requires Medicaid, will I lose all of my assets?No. Medicaid will allow a spouse living in the community to keep their home and a modest amount of the couple's savings. However, Medicaid does cap the amount of assets the spouse in the community can keep regardless of whose name the assets were in when the couple first applied. For this reason, it is critically important for a couple to speak with an elder law attorney to ensure that the assets are protected.
What is the "look-back period"?Medicaid applicants are required to disclose all financial records for the past five years, called the "lookback period." A recipient is required to list and verify all transfer of assets made during the lookback period as well.
Can I transfer assets to make myself eligible for Medicaid?Many transfers would make you ineligible for Medicaid. These are called "disqualifying transfers". A disqualifying transfer is a transfer made for less than adequate consideration (i.e. a gift or a partial gift) which is made for the purpose of making you eligible for Medicaid. Medicaid imposes an ineligibility period if an applicant or their spouse transfers or gives away assets prior to entering a nursing home. This is true regardless of the kind of asset is given away and regardless of the value. There are many exceptions to the transfer of asset rules. Transferring assets to certain recipients will not trigger a penalty period. These recipients include: (1) a spouse; (2) a blind or disabled child; (3) a trust for the benefit of a blind or disabled child; and (4) a trust for the benefit of a disabled individual under age 65 even for the benefit of the applicant under certain circumstances). Special rules apply with respect to the transfer of a home. In addition to the ability transfer one's home to his or her spouse, a blind or disabled child, or into trust for the benefit of a disabled individual, the applicant may freely transfer his or her home to: (1) a child under age 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; or (3) a "caretaker child," defined as a child of the applicant who has lived 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.
Can I still give $12,000.00 a year away?No. Not without it being considered a transfer. Many people mistakenly believe that because you can give away $12,000.00 per person per year tax free, that this is the same case with Medicaid. Unfortunately, it is not, and the gift may affect your eligibility.
What are some options for protecting my home and assets if I need to apply for Medicaid?Currently, in order to qualify for Medicaid in a nursing home, you can only have $2,000 in your name and certain other assets like an irrevocable prepaid funeral plan. For every $8,010 you give away to a person (other than your spouse with certain other exceptions) or an irrevocable trust, you are not eligible to receive Medicaid for one month. This is called the "penalty period". This means that the greater the assets you want to protect, the earlier you should start planning. The biggest asset most people try to protect is their house. An outright transfer to family members is usually not suggested because you lose all control and there are capital gains consequences to your family. A better option is to deed the house to family members with a retained life estate for yourself. This gives you the right to live in the house for the rest of your life and continue to receive all senior citizens exemptions. Upon your death, the house passes automatically to the beneficiaries and they do not have to pay capital gains tax when they sell the house at your death. This is not suggested if you want the option of selling the house while you are alive for reasons which should be discussed with your attorney. A deed with a retained life estate is subject to a five year lookback period. However, in the event you need Medicaid benefits prior to the expiration of the ineligibility period, the home can be transferred back to the applicant to obtain benefits. The best option which affords maximum flexibility is to transfer the house to an irrevocable trust. An irrevocable trust is an agreement between you and a trusted person who acts as trustee to take care of your assets. Such a trust can give you the right to live in the house for the rest of your life and continue to receive all senior citizens exemptions. At your direction, the trustee can sell the house and purchase another house for you. You would be entitled to all the income from the trust depending on how it is drafted. One disadvantage is that you must give up complete control over the assets in the trust. The transfer into the trust would be subject to a five year lookback period. In the event that the applicant needs MassHealth benefits prior to the expiration of the ineligibility period, the home cannot be transferred back to the applicant to obtain eligibility. Cash assets can be transferred outright to family members. However, by doing this, you relinquish all control. Sometimes, a better option is to use an irrevocable trust as described above. Highly appreciated assets such as stock should not be transferred outright if possible. Instead, it is better to use an irrevocable trust so that upon your death, the stock can be sold and the beneficiaries will not have to pay capital gains tax. All of these options can create a Medicaid penalty period and should be explored with a knowledgeable Elder Law attorney first before you make any transfers of property. The best time to do Medicaid planning is when you are well. Planning in a crisis situation does not always allow for complete protection of your assets.
How long is the penalty period?The length of the penalty period is calculated using a penalty divisor determined by MassHealth, based on the average monthly cost of nursing homes in Massachusetts. The penalty divisor increases annually to reflect the change in nursing home rates. The current penalty divisor is approximately $8,000 per month. If one transfers $100,000, he or she is ineligible for Medicaid coverage for approximately thirteen months ($100,000 ÷ $8,000 = 13.02). The Deficit Reduction Act of 2005 states that this ineligibility period begins when the applicant is "otherwise eligible" for Medicaid. Applicants are "otherwise eligible" if they meet three requirements: 1) they must reduce their assets below $2,000; 2) they must require a nursing home level of care; and 3) they apply for MassHealth and receive a denial notice. The new law does not apply to transfers made prior to February 8, 2006. Because Medicaid only considers transfers made during the five year lookback period, there is an effective cap of five years on the ineligibility period. However, without proper planning, the ineligibility period can extend far beyond five years.
Do I get to keep my income if I am on Medicaid?No. You are required to pay to the nursing home your total monthly income, minus $72.80 for personal needs and an amount equal to your premium for health insurance. Income received from Social Security, pensions, interest, dividends and rents must be use to pay for your care.
What happens to my spouse if I need Medicaid and his or her income is significantly less than mine?In some cases, the community spouse is also entitled to share in all or a portion of the monthly income of the nursing home spouse. Medicaid determines an income floor for the community spouse, known as the Minimum Monthly Maintenance Needs Allowance (MMMNA), which is calculated for each community spouse, based on his or her housing costs. Where the community spouse can show hardship, Medicaid may award a larger MMMNA, but only after a hearing. If the community spouse's income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse's income.
Is my spouse required to pay for my nursing home care?The income of the community spouse will continue to be undisturbed and he or she will not have to use his or her income to support the spouse receiving Medicaid benefits. |
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