One of the most frequent concerns clients express is the fear that they will lose all of their assets paying for long-term nursing home care. This is a valid concern. The cost of long-term care is very high – $10,000 to $14,000 per month in Massachusetts, and there is no easy way to pay for it. Medicare or other health insurance plans cover only a limited amount of long-term care costs.
Medicaid, also called MassHealth in Massachusetts, is the state and federally funded program that will pay for long-term nursing home costs for individuals who are both medically and financially eligible. Here are five basic rules for eligibility for long-term care Medicaid – but beware! Each rule has exceptions that could apply, depending upon the particular situation.
1. In order to be eligible for long-term care Medicaid benefits, a person cannot have more than $2,000 of countable assets. In Massachusetts, countable assets include bank accounts, stocks and bonds, retirement accounts, and annuities. The cash value of life insurance policies may be countable, depending upon the face value of the policy. An individual’s primary residence is not a countable asset. This means a person who owns a home will not be required to sell the home in order to be eligible for long-term care Medicaid benefits. However, this is not as great as it sounds. The Commonwealth will place a lien against the home of a MassHealth recipient and will collect amounts paid to the nursing home on behalf of the homeowner when the home is sold or after the death of the nursing home resident.
2. The spouse of a nursing home resident may retain countable assets over and above the $2,000 that the nursing home resident may keep. When a nursing home resident has a spouse who is living in the community, the spouse is entitled to keep additional countable assets. The amount the spouse is entitled to keep is called the Community Spouse Resource Allowance (CSRA). This year (2015), the CSRA is $119,220.
3. A person who is eligible for long-term care Medicaid benefits must pay most of his monthly income to the nursing home. A person who receives Medicaid for long-term nursing home care costs must pay her monthly income to the nursing home. This includes Social Security, pension income, annuity payments, and net rental income. A person is permitted to keep enough income to pay for her health insurance premium and a small monthly personal needs allowance ($72.80 in 2015).
4. The spouse of a nursing home resident may be entitled to keep some of her spouse’s income. When the nursing home resident has a spouse who is living in the community, the spouse may be entitled to keep some of the resident’s monthly income. The government recognizes that people living in the community need money to pay their bills. The Medicaid rules include an “allowance” for the spouse of a nursing home resident. If the community spouse’s income is less than the amount of the allowance, then the income of the nursing home spouse can be retained by the spouse at home rather than be paid to the nursing home (see #3 above). This is called the Monthly Maintenance Needs Allowance (MMNA). This year (2015), the maximum amount of the MMNA is $2,980. This means that if the monthly income of the spouse in the community is at least $2,980, she will not be entitled to keep any of her spouse’s income (unless she meets one of the exceptions to this rule).
5. Giving away assets will cause a period of ineligibility. The Medicaid program is intended to provide assistance to those who cannot afford to pay for long-term care costs. In order to prevent individuals from taking advantage of the program by giving away assets to meet the financial eligibility requirements, there is a five-year look-back period. The application for long-term care Medicaid benefits requires that the applicant disclose all gifts made within the five-year period preceding the application. If gifts were made to anyone other than a spouse during those five years, there will be a period of ineligibility imposed. The length of the ineligibility period will be based on the value of the assets given away.
There is no penalty for transferring assets between spouses. However, the ineligibility period will apply even if the non-applicant spouse is the one who gives away assets. For example, if a wife gives her son $50,000 in January and her husband goes into a nursing home in September, the $50,000 gift will cause the husband to be ineligible for Medicaid benefits for a period of time.
As noted above, the Medicaid eligibility rules are complex and there are multiple exceptions to just about every rule. If you have concerns about paying for long-term care, consult with an experienced elder law attorney who can explain how the rules apply to your situation and discuss planning options.
Attorney Suzanne R. Sayward is certified as an Elder Law Attorney by the National Elder Law Foundation, a private organization whose standards for certification are not regulated by the Commonwealth of Massachusetts. She is a partner with the Dedham firm of Samuel, Sayward & Baler LLC. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit www.ssbllc.com or call 781/461-1020.
July 2015