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 $7,680(updated 1/15/08), which is the Commonwealth's estimate of the average monthly cost of private nursing home care. For example, if $76,800 was transferred to a child, the transferor would not be eligible for Medicaid until the expiration of approximately 10 months.

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 period started?

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!

Question:   How 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.

Question:   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 $750,000. 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 $109,560(updated 2009). 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.

Question:   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?

The general 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 $1,750 (updated 2009) 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.

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.