Questions about Medicaid and MassHealth are usually related to concerns about the ownership and transfer of assets for elderly individuals seeking admission to a long term care facility. Our clients are often uncertain on what types of transfers are ok versus which ones are not. Similarly, they do not know what medical condition an applicant needs to have in order to qualify for benefits under the program. This article helps applicants understand what the most common problems might be in qualifying for MassHealth.
Medicaid Denial Reason Number 1: Too Much in Assets
Medicaid was designed to take care of those who are too poor to pay for their own medical care. Because of this, the program naturally has several requirements that an applicant or patient must meet before any benefits are given.
Savings accounts or checking accounts are easy indicators that a person is over the asset level, but other less used accounts (like CDs, mutual funds etc.) are at times difficult to discover for a family member. While some may find it hard to believe that such accounts could be “forgotten,” we frequently encounter issues like this with the elderly who are seeking long term care. Many have split their assets between several accounts over the years, and passbooks can be easily lost when they are not used on a regular basis.
Owning a home does not necessarily result in a Medicaid denial, but an unmarried Massachusetts homeowner seeking benefits for long term care at a facility will need to take certain steps in order to qualify (Keep in mind that there are different protections/allowances for married MassHealth applicants, including the ability to transfer the home). The main step will be to place the home on the market, in anticipation of applying proceeds to MassHealth for any benefits incurred by the applicant.
Other assets that could flag the attention of MassHealth include art or antique collections, vehicles, equipment, second homes and other real estate interests.
Medicaid Denial Reason Number 2: Disqualifying Transfers
By far, the disqualifying transfer is one of the most compelling reasons to hire an attorney to qualify for MassHealth Medicaid benefits in Massachusetts. Such transfers do not have to be fraudulent to be “disqualifying,” and so potential applicants for long term care under MassHealth must be very careful on gifts made to friends or family. Attorneys are the most reliable resource for current MassHealth rules on such gifts. An applicant in such situations must either find a reason to qualify the transfer, or else “cure” the transfer (i.e. take the asset back into his or her possession).
The following are some transfers that might seem legitimate, but that MassHealth will nevertheless declare “disqualifying”:
Situation A: Conveying the Family Home to a Child
Mayna is a widowed woman who believes that she soon will need long term care benefits. Her son, Christopher, is her only child and does not yet own his own home. In anticipation of applying for MassHealth, Mayna and Christopher agree that Mayna will convey the home to her son. By doing so, they figure, Mayna will qualify for MassHealth benefits, and, because she no longer has assets there will be no charges assessed to her. Unfortunately, Mayna and Christopher are mistaken. Under the five year look back period under MassHealth, any transfers made for less than fair value within five years will be considered disqualifying.
Options that Mayna and Christopher might have considered if they had spoken to a MassHealth attorney:
- Caretaker Child Exception – Whereby Christopher might have safely inherited the home.
- Disabled Child Provisions – If Christopher qualified the transfer might be validated.
Situation B: Non-taxable Gifting
Arthur is single, and notices that as time has gone on he is less able to safely perform normal daily tasks without assistance; getting out of bed and dressed, and cooking all his meals have become a lot more burdensome. At some point soon, he figures he would like to enter a long term care facility to better care for his daily needs. Having significant money left in a retirement fund, he begins gifting $13,000 to each of his sons Sam, Mike and Andrew. By doing so, he figures he can legally give about $39,000 per year without consequence. And while this is true under IRS tax law, these amounts are disqualifying transfers under MassHealth rules. If Arthur needs to visit a long term care facility within five years, he will need to get these assets back from his sons.
Here are some suggestions an attorney might have made:
- Don’t make these transfers! If long term care was anticipated, Arthur might have opened CDs in his sons’ names for the same amount, allowing for a refund if the money needed to be cured – or a valid gift if the 5 year period passed.
- Start a personal care contract with one or more of the sons. This allowance, though complex, might also help Arthur stay in his home for a longer period of time.
Medicaid Denial Reason Number 3: Not Medically Qualified
To qualify for Medicaid, a MassHealth applicant needs to not only qualify financially, but also medically. In essence this means that the individual will need assistance with 3 activities of daily living (“ADLs”) such as mobility, dressing, eating and hygiene. These requirements might seem easy to fulfill, but in practical application they will likely preclude most all applicants who just need some assistance.
The practical implications of these regulations mean that MassHealth benefits are generally not available to those who only need limited assistance. Some of our clients ask, for example, whether MassHealth benefits are available in the home, or whether Medicaid covers those living in assisted living facilities. Almost without exception the answer is no. Though there would certainly be cost savings in the long run if the government helped some of the elderly maintain independence, such programs are quite limited as of today in Massachusetts.
Final Thoughts
Applying for Medicaid is a fairly straightforward process, but doing so to maintain family assets (and sanity!) requires a great deal of knowledge. If your family decides to do the application by themselves, then beware of these common pitfalls. But if there are any assets at all to be protected, hiring an attorney like one of us is highly recommended. Chances are high that an applicant will need to spend down to apply for MassHealth, and any legal assistance that the family needs will be a valid expense in that process.
