During the process of applying for Medicaid, Massachusetts (or whatever state applied within) will look at all of the applicant’s assets including any major transfers occurring in the past five years. If the assets are deemed countable, and if owning them would have disqualified the individual from Medicaid benefits, then the state may require the applicant to take them back or else impose a penalty. In this process, we usually ask our clients for bank records to look for transfers of $1000 or greater. Sometimes, if sizable gifts exist, we’ll even request these statements for the entire 5 year lookback period. The rule can be very burdensome in that way, and many others. Still, even in troublesome situations we can explore alternative strategies
(Read: Avoiding the Five Year Lookback Period for MassHealth)
But the purpose of this rule is to ensure that funds are available for those truly unable to pay, and to make sure that those who can pay for their healthcare do so privately for as long as possible. But with the average monthly cost of Massachusetts nursing home care falling within $8,000-9,000, it is very important for every family to have some Medicaid plan in place just in case.
So what happens if the applicant made a gift that MassHealth believes disqualifies the applicant for benefits? Below are some hypothetical scenarios to illustrate what occurs in practice. Note that the examples below use the penalty divisor of $300/day (or $8370/month), the Massachusetts penalty divisor as of October, 2013.
NOTE: Massachusetts penalty divisor rates and Medicaid regulations change frequently. If you are looking for specific guidance we have a professional obligation to tell you this webpage is not the place! For such advice you may schedule a free consultation with our office to speak with Massachusetts Medicaid attorneys Yates or McNamara. Call 508-888-8100 or write us on our Contact Us page.
Example 1: Marie gives a home to her son:
Two years ago, Marie gave her home worth $106,860 to her son Frank. If at any point within five years of the transfer Marie goes into a nursing home, and is otherwise eligible for Medicaid, she will be denied Medicaid benefits.
$106,860 (value of the home) /$300 (Medicaid daily penalty divisor) = 356 days
Marie will be penalized for 356 days of Medicaid benefits, meaning she must pay the fees privately. Her eligibility for Medicaid will resume 356 days after the date she was otherwise eligible to enter a nursing home.
Example 2: Marie adds her son on the deed of the home:
Putting someone else’s name on a home is actually a gift. So in this situation, Marie is giving her son half the home. The same result as before would therefore take place, but the penalty would only affect Marie’s eligibility for Medicaid for half as much time. Here the gift went as follows:
$53430 (value of half the home)/$300(Medicaid daily penalty divisor) = 178 days.
Marie will be penalized for six and a half months of Medicaid benefits, and would have to pay any nursing home fees privately in the time that she was otherwise eligible.
How Mass Health Treats the Lookback Period
Please note that in Massachusetts the MassHealth agency implements the greater federal law requiring a 5 year look back on all transfers. Thus it is the MassHealth regulations that the applicant must observe when applying for benefits. Unfortunately, these regulations require what amounts to a “guilty-until-proven-innocent” position with regard to all transfers made. In practice, this means that a $1000 expense made 4.5 years ago might disqualify the applicant from Mass Health benefits! In such situations the applicant should prove why the expense was unrelated to qualifying for MassHealth, often upon appeal at a Fair Hearing.
What this means to us as attorneys is that it is our job to educate our clients on the best practices for preparing an application. From years of experience with MassHealth we can flag the weakest parts of an application and reinforce the justifications for certain expenses. The absolute last problem that any MassHealth applicant wants to encounter is a denial of benefits, and our all inclusive service handles the entire process from compiling the necessary materials, to completing and submitting the application, to representing the applicant at a Mass Health Fair Hearing, if necessary.
Of course transfers falling within the 5 year lookback rule are not the only factors affecting eligibility for Medicaid. The most dependable and cost-effective way to guarantee you are prepared to apply is to consult an experienced Massachusetts Medicaid attorney.