MassHealth (the Massachusetts Medicaid program) has the right to review all financial transactions for an applicant applying for long-term care benefits and the applicant’s spouse in the five years prior to the application. This is called the “five-year look-back” period. MassHealth looks for “disqualifying transfers,” which are transactions made for less than fair market value; in other words, a transfer of assets where a good or service of equal value was not received for the money exchanged. The most common example of a disqualifying transfer is gifting to children, grandchildren, or charities. When possible, clients work against the five-year look-back period by transferring assets to an individual or qualifying trust and then wait the five-year look-back period before applying for MassHealth.
What happens, though, when nursing home care is imminent, and you do not have five years to protect your assets? The good news is all is not lost. Protecting assets in this scenario depends on whether the applicant is married or not.
For a married applicant, the applicant retitles all possible assets into the name of the spouse who will remain at home. The spouse can then maintain the principal residence in their sole name and no more than $162,660 of liquid assets (this amount changes each year). All excess liquid assets are transferred into a Medicaid-compliant annuity, which converts excess countable assets to a non-countable stream of income.
For a single individual, the applicant must liquidate all possible assets and transfer them into a pooled trust (also known as a d4C Trust, based on the federal statute that allows them). MassHealth allows transfers into pooled trusts within the five-year look-back period because any assets remaining in the pooled trust upon the applicant’s death will be paid in part to the non-profit that runs the pooled trust and in part to MassHealth, to reimburse them for expenses paid on the applicant’s behalf during the applicant’s lifetime. Any remaining funds can be paid to the beneficiaries designated by the applicant.
There may be additional planning options for applicants whose children live with them, siblings live with them, or who have a child or grandchild with disabilities. There are a lot of traps for the unwary with this type of planning, so it is always best to work with an experienced professional.
For more information, contact a member of Mirick’s Elder Law Group or consider attending one of the following presentations.
Attorney Elizabeth Newton will present on this topic:
- Tuesday, February 24 at the Marlborough Senior Center
- Monday, March 9 at the Holden Senior Center
- Wednesday, March 18 at the Rutland Senior Center
