Keep the house or get Mom and Dad the long-term care they need? Some Massachusetts families find themselves in the position of having to choose between the two, thanks to MassHealth regulations. Don’t panic, though; adult children who find themselves in the position of making decisions for their aging parents do have options here in Massachusetts.
First, some background on these policies. MassHealth – the name for the Massachusetts program that administers Medicaid – spends a disproportionate amount of its annual budget on long-term nursing home care. MassHealth spends about 18% of its funding on the 3% of MassHealth members that require this care. Because that kind of spending puts such a strain on the MassHealth budget, the program is allowed to recoup some of its costs by making the members of that 3% contribute to their long-term care costs.
One way MassHealth does this is by putting liens, or lien law, on those members’ homes. Let’s say an elderly couple, Tom and Judy, share a home in Wayland, Massachusetts. They both require more intensive medical care and decide to move into a nursing home. They’re MassHealth members so the program pays most of the bill. (Tom and Judy may also be required to contribute a large part of their income to defray costs.) When they leave their house, MassHealth can put what’s called a living lien on the property. It means that if the house is sold while Judy and Tom are still alive and receiving long-term care, MassHealth gets to keep the profits, up to what has been paid, and the rest must be spent on the skilled nursing facility.
Of course, like all Medicaid regulations, the so-called “lien law” is complicated and allows for plenty of exceptions. A lien won’t be placed on the house if the person receiving long-term care plans to move back into the home, for example. The state also won’t place a lien on a house if it’s inhabited by someone who is a protected relative – that is, the institutionalized person’s spouse, under-21 child, permanently disabled child or a sibling who meets certain criteria. To go back to the example of Tom and Judy, the state won’t put a put a lien on their house if their 20-year-old child lives there, or if only Judy moves into the nursing home and Tom stays at home.
There are a few other ways to avoid a lien. One way is to transfer ownership of the home to someone else; after all, if the person entering long-term care no longer owns a home, MassHealth can’t stake any claim to it. However, this option affects the five year look back period, which is not discussed in this article. MassHealth members who bought long-term care insurance that meets certain MassHealth requirements are only subject to partial estate recovery, which means MassHealth may not place a lien on their homes. Therefore the home may be transferred to another person during the member’s lifetime. And if the MassHealth member in question dies and the house has not yet been sold, the lien is released.
Seems complicated, right? It is. But for adult children of aging parents, understanding these policies is hugely important, especially if you’re counting on inheriting the family home. If your parents do need long-term institutional care, that’s not the time you want to find out that the state has a claim on their house.
It’s in your best interest, and in the best interest of your aging parents, to consult with lawyers who are experienced with estate planning – and to do it soon. There are a lot of different ways to prepare for your parents’ futures that help set them up to receive the care they need and protect your financial future. Start exploring your options and make plans now so they’re already in place when you need them.
Ladimer Law is a full-service estate planning firm that specializes in working with clients here in Massachusetts. Our experienced attorneys can walk you through all your options and help you make the right choices for your parents and yourself. Contact us today!
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