When determining whether you qualify for benefits through Medicaid, known as MassHealth in Massachusetts, to cover medical expenses, your local Medicaid agency will carefully evaluate your income and the property that you own. When you apply for Medicaid, any gifts or transfers of assets made within the previous five years (60 months) of the date of application for Medicaid benefits are subject to penalties. This time span is called the “lookback” period. Any gifts or transfers of assets made before the lookback period are not subject to penalties. What if you made a substantial investment during the “lookback” period, but the investment completely failed and you lost all the money? Will the amount you invested be counted against you when determining your eligibility for Medicaid benefits?

According to most experts, the answer depends. As a general rule, if the investment was made with an unrelated third party, it likely won’t be a problem. For example, if you invested $100,000 in speculative biotechnology stocks through a broker, Medicaid likely won’t include it as part of your assets eligible to pay for your medical needs. However, if the investment was made with a friend or family member who was starting up a new business venture, this investment could be a problem. Under these circumstances, Medicaid will be more inclined to view the investment as a gift.

There are steps that you can take, however, to minimize the risk that a failed investment will disqualify you for Medicaid benefits or impact your MassHealth eligibility. If you can produce documentation to show that your investment was not a gift, that it had to be repaid, or that your interest was marketable (could be sold to someone else), the investment may avoid challenges by Medicaid. A stock certificate may suffice, or a loan document that specifies the terms of repayment may be enough to survive the scrutiny of MassHealth officials.

Contact the MassHealth and Medicaid Planning Attorneys at Baker Law Group Today

To learn how we can help you with any legal issue related to your MassHealth benefits and MassHealth eligibility, contact our Boston elder law attorneys by e-mail or call us toll-free at 1-800-701-0352. We will help you understand your rights and obligations, so that you can take the right steps to protect your assets.