Frequently Asked Questions about Elder Law

The major distinction between Medicare and Medicaid is that Medicare is a federal health insurance program for individuals age 65 and older and many with disabilities, while Medicaid is needs-based state and federal social welfare program.

Medicaid / MassHealth

In Massachusetts, Medicaid is known as MassHealth. Eligibility for Medicaid/MassHealth is determined by meeting certain financial requirements, including income and/or asset limits. If eligible, Medicaid covers more health services than Medicare and to a broader spectrum of the population. Medicaid is available to those with disabilities, eligible seniors, children, pregnant women, parents of eligible children and to those who cannot afford insurance. It is possible to qualify for both Medicaid and Medicare.  Medicaid is the primary payor of nursing home care.

Medicare

Like traditional health insurance, Medicare covers skilled health care to address medical needs. Medicare is composed of three primary parts:

• Medicare Part A covers hospital bills
• Medicare Part B covers medical insurance
• Medicare Part D covers prescriptions

Note that while Medicare may pay for up to 100 days in a skilled nursing facility, an extended stay in a long-term care facility is not covered by Medicare.

When applying for financial assistance for long-term care services in a nursing home, MassHealth eligibility is largely based on an applicant’s countable and non-countable assets. If married, the spouse who remains in the community is allowed $128,640 (2020) in countable assets and the spouse applying for benefits is allowed $2,000 in countable assets. A single person or a married person with a spouse already on MassHealth is allowed $2,000 in countable assets.

It is very possible that the primary earner of the household (the recipient of pension and Social Security)  is also the spouse in need of long-term care benefits from MassHealth. Typically, this person’s income is used to offset the costs of nursing home care. However, this would often leave the spouse remaining in the community with little income to get by. MassHealth allows income of a member to be applied to the community spouse, instead of towards the cost of care, so that the community spouse has an allowance. As of January 1, 2020, the minimum allowance is $2,113.74 and the maximum of $3,216.00.

MassHealth  — with a few exceptions — will impose a penalty period when a person 65 or older transfers assets to a person other than a spouse and applies for MassHealth benefits within five years of the transfer. As a result, the applicant is denied MassHealth benefits while the penalty is in effect. Since the nursing home expects to be paid, making transfers (unintentionally or not) could be detrimental to one who later needs long term care.

Most transfers made within the 5 year look back subject an applicant to a penalty or disqualification period of benefits. Two factors impact the length of the penalty period: (1) the value of the asset transferred; and (2) the penalty divisor set by MassHealth, which is currently $367.21 per day (2020) or $11,016.30 per month. For example, transferring $350,000 of property will result in a penalty period of almost 32 months (350,000 ÷ $11,016.30= 31.77).

New laws make it more difficult to give away assets when it is determined that nursing home or long-term care is necessary. Penalties may be imposed on all transfers made within five years of applying for Medicaid (in Massachusetts Medicaid is MassHealth) and therefore adversely impact eligibility for MassHealth. In short, transferring your home to your children or another person other than your spouse will likely trigger a penalty or disqualification period, causing a person to be ineligible for MassHealth benefits.

Example:

Giving away your home may result in some unintended consequences, largely loss of control and exposure to creditors of the person to whom the gift was made. Consider the situation where a parent at the age of 65, in good physical and mental health, deeds their home to a child who is married. Fifteen years later, the child and his spouse file for divorce. Is the home, which you technically no longer own, part of a divorce settlement? What happens if the recipient of your generosity dies? In addition, there may be adverse tax consequences to giving assets away even if you do not have a taxable estate.

Whether it is asset protection, tax planning or both, the earlier a plan is developed to address future long-term care needs, there are more options available. A one size fits all approach does not work and various factors including the age, health, income, assets and personal care goals should be considered. There are typically three common sources for paying for long-term care services:

• Long-term care insurance;
• Personal funds; and
• Medicaid (known as MassHealth in Massachusetts).

In addition, planning for long-term care has more than a financial planning component. When developing a plan, consideration should also be given to where the care will be provided. The options typically include in the home, an assisted living facility, and or a nursing home. If the person plans to relocate to a warmer climate consideration should be given to the logistics of coordinating long-term care services and who will be impacted, i.e. a spouse and children. Further complicating the issue, everyone has their own wishes as to how they want to be cared for when and if long-term care services are needed.

For many, the primary goal as it relates to long-term care planning is to remain independent as long as possible and to stay in one’s home. There are many in home services available to seniors needing long-term care services in the home and Community MassHealth covers certain in home services. The services may include personal care services ranging from bathing, dressing, feeding, meal preparation, and other social services to elders so that they can live in their communities instead of in nursing homes. For those who cannot remain in the home 24 hours a day, adult day centers or residential programs may be viable solution. The elder for certain periods of time during the week goes to an adult center, for activities while a caregiver works or tends to his or her personal responsibilities. Some caretakers are eligible for to receive a stipend as an incentive to care for one needing long-term care services in the home. To be eligible for MassHealth services in the community, one must meet certain income and asset limits.

While property held in a revocable trust will typically accomplish an estate planning goal of avoiding probate, assets held in a revocable trust are accessible to a Medicaid applicant and therefore are generally categorized as countable assets when applying for Medicaid. For more on avoiding probate and estate planning, read about Asset Protection and Life Estate Deed.

When a loved one needs long-term care services, most often the focus is on the one in need of long-term care services and not the caregiver. Providing care to a spouse, parent, aunt, uncle or other loved one is a demanding and often stressful responsibility. Since the caregiver is likely to have other responsibilities – a career, children, a spouse of their own — ensuring that the caregiver receives a certain level of respite care is essential. Respite care can take many forms but the general goal is to provide breaks to the caregiver that promote balance, rejuvenation and relieve stress in a caregiver’s life. Examples of respite care include the following:

• Adult day centers
• Residential programs
• Planned overnight services
• Caregiver retreats
• Education and Support Programs

Irrevocable trusts are drafted to assist clients with different goals, including asset protection and tax planning. So while irrevocable trusts can be written to protect assets from the cost of long-term care, not all irrevocable trusts protect assets from such costs. The types of irrevocable trusts that protect assets in this way are often referred to as Medicaid Income Only Trust or Income Only Trusts.

Just because a trust is irrevocable, it does not mean it will protect your home or other property and assets.