The average cost of a semiprivate nursing home room in Massachusetts is $12,624 per month, and costs continue to rise. Although most people will need to live in a long-term care facility, care costs continue to increase. Many seniors deplete their hard-earned assets and retirement savings to pay for nursing home services. Planning ahead for long-term care needs can be done with a comprehensive estate plan.
Qualifying for MassHealth Benefits
Most private insurance companies do not cover long-term nursing home care, leaving individuals no option but to pay out of pocket. For many, a stay in a nursing home facility can deplete their savings, leaving them nothing to leave to their beneficiaries. One way to avoid paying nursing home costs out-of-pocket is to become eligible for MassHealth, Massachusetts’ Medicaid program. This program offers public insurance benefits that pay for necessary long-term care and other medical expenses.
If you’re over 65, you can apply for MassHealth benefits to cover your nursing home costs. However, if you have more than $2,000 in countable assets, you will not qualify for benefits. If you are married and your spouse continues to live in the community, you will be allowed to keep approximately $128,640.
The 5-Year Lookback Period
Sometimes people assume that they will be able to give their assets to their adult children, friends, or a cause when they move into a nursing home to become eligible for MassHealth benefits. Unfortunately, this isn’t the case. After a person dies, Masshealth expects to be repaid for the money it has paid for nursing home costs.
MassHealth has a five-year look-back period. Any assets you’ve transferred within five years of applying to MassHealth will count against you. You will be subject to a penalty period during which you won’t receive any benefits and must pay for nursing home costs out-of-pocket. Planning at least five years before applying for MassHealth benefits can help you avoid nursing home costs.
Will a Living Trust Protect Me?
Revocable living trusts are among the most well-used trusts for estate planners, and with good reason. With a revocable living trust, you can continue managing and controlling your assets until your death. You can also decide to revoke the trust at any point until your death. Some people believe that placing their assets into a living trust will help them qualify for Medicaid benefits because their assets will no longer be in their name.
Unfortunately, this isn’t the case. As you will still maintain control over the trust assets, MassHealth will count assets in a living trust against you when you apply for benefits. If the assets place your income level above the threshold, you won’t be eligible. Any assets in your living trust can be counted as countable assets for the purpose of MassHealth eligibility.
Even some assets that would normally be considered non-countable if they weren’t placed in the trust may count against you. For example, money in your bank account, IRAs, 401(k)s, cash, and property other than your primary residence may count against you.
Creating an Irrevocable Trust to Protect Your Eligibility
When estate planning to avoid nursing home costs, irrevocable trusts are the gold standard. The use of irrevocable trusts has helped many Massachusetts qualify for Medicaid/MassHealth who wouldn’t otherwise qualify. These estate planning tools are designed to protect assets that may appreciate over time. Irrevocable trusts cannot be changed or revoked and all of the assets transferred into the trust are owned by the trust.
As a result, MassHealth cannot count the value of the assets transferred into an irrevocable trust against you. If you decide to create an irrevocable trust, your attorney will help you take the following steps:
- Identify the home, vehicles, businesses, and any other assets to be included in the trust
- Identify the beneficiaries of the trust who will receive the assets when you die
- Explain when the assets should be transferred to the beneficiaries
- Appoint a trustee who will manage the assets and distribute them according to the trust agreement
- Create the irrevocable trust in accordance with Massachusetts laws
The key to using an irrevocable trust to help you qualify for MassHealth is to create the trust at least five years before you need to apply for MassHealth. Doing so will allow you to avoid MassHealth’s five-year look-back period.
Should I Transfer My Home Into an Irrevocable Trust?
For many of us, our homes are our most valuable assets. Transferring your home into an irrevocable trust can help you protect your home from being used as payment leverage against long-term care assistance. When you transfer your home into an irrevocable trust, you can maintain the right to live in your home for the rest of your lifetime. You can appoint yourself as a trustee for the rest of your life, giving yourself the ability to control your assets.
In some cases, transferring your home into your irrevocable trust will remove it as a countable asset when you apply for MassHealth Benefits. As long as you transfer your home into the trust before the five-year look-back period, your home can be off-limits for MassHeatlh’s asset calculation and protected for your beneficiaries. Downsizing your home partway through that time period typically won’t negatively impact your eligibility.
Emergency MassHealth Nursing Home Planning
The sooner you begin planning, the better when it comes to nursing home planning. In a perfect world, you will plan far enough in advance that she will become eligible for MassHealth benefits when you need to move into a nursing home. If you or your loved one needs nursing home services now, Surprenant & Beneski, PC offers emergency MassHealth planning services. We can help you take immediate steps to become eligible as soon as possible, helping you manage excess income improving the likelihood of approval.
Discuss Your Long-Term Care Plan WIth a Skilled Attorney
If you or your loved one need legal assistance preparing for long-term care, Surprenant & Beneski, PC is here to help. Contact our Southeastern Massachusetts estate planning attorneys today to schedule your initial case evaluation. We will carefully review your situation, answer any questions you have, and help you create an effective strategy to protect yourself and your assets.