Medicaid Can Still Make You Pay!

MassHealth long-term planning is some of the most complicated work that we do here at Monteforte Law. 

Why? We know better than anybody how strict government regulations can be, especially when it comes to government-run aid programs. Medicaid, run by MassHealth in Massachusetts, is no exception. The Medicaid program is federally funded but it’s administered by the individual states, who put their spin on it. For purposes of this article, instead of referring to the overall Medicaid program, we will refer specifically to the Massachusetts version, of MassHealth. The states are still subject to federal rules, and one such rule is called “Estate Recovery”. The Estate Recovery rule requires states to go after the estates of deceased individuals that received MassHealth long-term care benefits. The goal is to recover funds paid out on the deceased person’s behalf from their estate after they die. Even if the state does not want to seek such recovery, they are forced to follow the federal regulations. This rule was the topic of a recent Brief from the advocacy group Justice in Aging, with the National Academy of Elder Law Attorneys (NAELA), and other advocacy organizations (View and download the Brief HERE). The brief opposes the rule and instead advocates for either the elimination of the rule or state choice in the recovery requirement.

So how does this all work?

Well, assume that you’ve gone through the process of applying for Medicaid/MassHealth for long-term care benefits in a nursing home and that your application was approved. Great, one hurdle down! Now also assume that you still own your home. MassHealth can (and will!) place a lien on your property if they are paying out long-term care benefits for you. A lien is a legal tool that acts as a way to collect money that is owed. A document is filed with the Registry of Deeds which attaches to the home, requiring that the lien is paid off if the home is sold during your lifetime (almost like a mortgage). With this lien in place, MassHealth can collect any money paid out on your behalf when the property is sold during your lifetime, or they can try to get the funds out of your estate after your death (Estate Recovery). It is specifically this Estate Recovery method that Justice in Aging and NAELA oppose in their brief, and which we at Monteforte Law also support.

As the brief points out, you’ll only qualify for Medicaid / MassHealth if you are below their asset limits. If you are over the asset limit, Medicaid requires you to spend down your assets before you will be eligible for any long-term care benefits or you risk creating a problem within the 5-year look-back. There are very few assets that are exempt from the spend-down requirement, one being your primary home. For many of our clients, their home is their single largest asset. Perhaps even more importantly, it is a dream for many to purchase their own home and pass it on to their family. When MassHealth has a lien on the property, however, passing the home or its value onto the family can become an impossibility. A family dealing with major health issues in a loved one, such as Alzheimer’s or dementia, is left even further devastated when MassHealth comes looking for repayment. All of a sudden, the family home that was always intended to be passed down is gone. This is a nightmare situation for anyone to go through and something we try to help all our clients avoid through proper planning. We’ve dealt with this situation many times, and MassHealth does not like to compromise – they want their money.

Both groups, Justice in Aging and NAELA, focus most of their argument against Estate Recovery on the terrible consequences of the Estate Recovery rule. It’s easy to imagine MassHealth’s argument in favor of estate recovery claims—the more money they have in the coffers, the more people they can help by providing long-term care benefits. But this argument fails to account for the big picture issues, and also fails to acknowledge that the amounts recovered under the mandate are negligible after considering the time and effort put into the recovery. Again, remember that MassHealth is only available to those with few assets in the first instance, or who have planned and positioned their assets to allow for MassHealth approval. This means that MassHealth is seeking to recoup from the estates of families of modest means, or who have spent down their assets to qualify for MassHealth long-term care in the first place. For a family in that position, the loss of more money from the estate is especially significant and serves only to further destabilize the family’s financial circumstances. As the NAELA brief points out, this destabilization is often far-reaching, affecting low-income neighborhoods on a larger scale. There is a clear disproportionate impact of the practice on people of color who have suffered at the hands of discriminatory housing policies for generations. After understanding the consequences of continuing with estate recovery claims, it is difficult to support the Estate Recovery rule.

Estate recovery claims are a particular concern in Massachusetts because of how they are calculated.

Massachusetts uses the “total capitated rate” to calculate the amount of the lien. The “total capitated rate” is the cost that MassHealth determines is required for one month of care. This rate is used to calculate the amount of the lien even if the actual cost of the coverage you received was less than the predetermined rate. Considering the individual and societal impacts discussed above, it hardly seems fair for the state to recover these funds. But it is unfathomable to think that MassHealth might be recovering more money from your estate than what they paid out!

Wondering if there’s anything you can do to protect yourself and your family?

The first step is to see an attorney who specializes in estate planning and elder law. It is an estate planner’s job to help clients plan for the future and protect their assets for their families. We know how hard you’ve worked to make a living for yourself and your family, and we understand the importance of passing as much as you can on to the next generation. If it is early enough, we can walk you through various planning tools and options, such as a Medicaid Trust, that can help to protect your assets in the event you need Medicaid / MassHealth coverage in the future. Don’t wait too long, though—Medicaid has a five-year lookback period that you need to bear in mind when doing any planning. What if you can’t wait five years and you need Medicaid now? That’s alright too—there are several planning tools that we can use to preserve as many of your assets as possible, or at least make your assets last longer.

Medicaid / MassHealth long-term care planning is extremely complicated, and if done incorrectly or by someone inexperienced, can render you ineligible for Medicaid.

You need a specialist on your side!

To learn more about MassHealth and how difficult it is to get your application approved, read our FREE report "5 Reasons Your MassHealth Long-Term Care Application Will Get Denied" here.