Serving Massachusetts and

New Hampshire since 1992.

PAYING FOR LONG-TERM-CARE

• Medicaid Basics

     Today, in the United States there is no “system” for providing long-term care.  For the most part you will have to pay for your own care.  Medicare is health insurance that pays for medical needs (doctor visits, hospital care, etc.) but it does not pay for care that is not medically necessary (long-term custodial care in a nursing home, or long-term at-home care.)  The only real "insurance" plan for long-term-care is Medicaid.  Medicare may pay for some skilled nursing care (up to 100 days).  Private insurance, if you have it, may cover some of the cost of at-home, or nursing-home-care.  More people are buying Long-Term-Care Insurance today, but if you do not buy insurance before a medical need develops, you will not qualify for it.  The result is that most people pay out of their own funds for long-term care until they become eligible for Medicaid.  While Medicare is an entitlement program, Medicaid is a form of welfare.  To be eligible for Medicaid, you must be “poor” under the program's guidelines.

     Without proper planning nursing home residents can quickly lose the bulk of their life's savings.  So, for many families, the object of long-term care planning is to protect savings (by avoiding paying them to a nursing home) while simultaneously qualifying for nursing home Medicaid benefits.  This is a difficult balancing act, but can usually be accomplished to some extent within the rules of Medicaid eligibility.  Proposed and recent changes to the Medicaid laws make advanced planning essential, and severely limit your choices if you currently need care and have not planned. 

• Assets

     In Massachusetts, Medicaid is called "MassHealth."  In New Hampshire it is still called "Medicaid." To qualify for federal reimbursement, the state programs must comply with federal statutes and regulations, and so the federal Centers for Medicare and Medicaid Services (CMS) [formerly the Health Care Financing Administration (HCFA)] also has jurisdiction.

     The basic rule of nursing home Medicaid eligibility is that an applicant, whether single or married, may have no more than the maximum amount of "countable" assets in his or her name ($2000 in Mass., $2500 in NH).  "Countable" assets generally include all belongings except for (1) personal possessions, such as clothing, furniture, and jewelry, (2) a motor vehicle, (3) the applicant's principal residence (with some exceptions), and (4) assets that are considered inaccessible for one reason or another.

• The Home

     The home will not be counted against the asset limits for Medicaid eligibility purposes as long as the nursing home resident intends to return home or his or her spouse or other dependent relatives live there.  As a result, for all practical purposes most nursing home residents do not have to sell their homes in order to qualify for Medicaid.  However, a lien may be placed on the home, and the State may seek estate recovery. (See - Liens and Estate Recovery)

• Transfer Penalties

          The other major rule of Medicaid eligibility is the penalty for transferring assets.  If an applicant (or his spouse) transfers (gives away) assets, he will be ineligible for Medicaid for a certain period of time.  The actual period of ineligibility depends on the State-Determined Average Cost of Nursing Home Care. 

• Exceptions to the Transfer Penalty

     Transferring assets to certain recipients will not result in a period of Medicaid ineligibility.  These exempt recipients include:

(1)   A Spouse (or anyone else for the spouse’s benefit);

(2)   A blind or disabled child;

(3)   A trust for the benefit of a blind or disabled child; or

(4)   A trust for the benefit of a disabled individual under age 65 (even for the benefit of the applicant under certain circumstances).

     Other exceptions apply to the transfer of a home.  In addition to being able to make the transfers without penalty to a spouse or a blind or disabled child, or into a trust for other disabled beneficiaries, 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,” who is defined as a child of the applicant who 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.

• Liens And Estate Recovery

     The state has the right to recover whatever benefits it paid for the care of the Medicaid recipient from his or her estate.  Generally, the only property of substantial value a Medicaid recipient owns at death is his home.  Many states only seek recovery against “Probate” assets.  Assets that bypass probate, such as jointly held assets, also may avoid estate recovery.  Congress has given the states the right to seek recovery against non-probate property.  New Hampshire has extended its recovery procedures to include jointly owned assets in addition to the Probate Estate. Massachusetts had extended recovery to include other property interests but following intense lobbying from Elder Advocates including the Massachusetts chapter of the National Academy of Elder Law Attorney NAELA), these changes were repealed.

     While estate recovery occurs only at death, the State may place a lien on the home of a Medicaid beneficiary living in a nursing home unless certain relatives live at home.  These include a spouse, a child under age 21, a blind or disabled child, and a sibling who lived in the house for at least a year before the owner moved to a nursing home.  If a house is sold during the Medicaid beneficiary’s life, the proceeds will be a countable resource, and will render the owner ineligible for Medicaid until the funds are spent.

• Income

     A nursing home resident on Medicaid, must pay all of his income, less certain deductions, to the nursing home.  The deductions include a personal needs allowance ($72 in Mass, $56 in NH), a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance to the spouse that continues to live at home.

• Spousal Protections

•  Assets

     Medicaid law provides protection for the spouse of a nursing home resident, known as the “community” spouse.  The general rule is that the spouse of a married applicant is permitted to keep one-half of the couple’s combined assets (as of the date of institutionalization) up to $104,400.

• Income

     The income of the community spouse will not have to be used to support the nursing home spouse receiving Medicaid benefits.  In some cases, the community spouse is also entitled to share in some or all of the monthly income of the nursing home spouse.

• The Medicaid Application

          Applying for Medicaid is cumbersome and tedious.  Every fact asserted in the application must be verified by documentation.  You may complete the application yourself, or you can seek the assistance of a professional when applying for Medicaid benefits, but you will have to pay for this expense.  Sometimes the results achieved by seeking professional help can be well worth the cost of the advice.

NOTE:  This is a simplified summary to a complex area of law.  Do not act on this summary without the guidance of a Elder Law Attorney.  This summary is based on Massachusetts and New Hampshire state law and may not be accurate in other jurisdictions.  Laws are frequently changed; the information in this summary may quickly become outdated and inaccurate.  This summary is for educational purposes only and should not be construed as legal advice.  Consult your attorney for all legal advice.

Edward H. Adamsky, Attorney At Law ♦ Licensed in Massachusetts and New Hampshire ♦ 269 Middlesex Road, Tyngsboro, MA 01879  978-649-6477