Will you need nursing-home care someday? And if you do, will you be able to afford the five-figure monthly fees out of pocket? Many Americans don’t have the means to afford long-term care. That’s where Medicaid steps in. Called MassHealth in Massachusetts, this program can be a lifeline for the Commonwealth residents who need its coverage. But too many applicants don’t realize the financial consequences of enrolling in MassHealth. Before you make any decisions, make sure you have the full picture.
Benefits of MassHealth
Like all Medicaid programs, MassHealth provides health coverage for vulnerable people, including elderly and low-income individuals. MassHealth coverage allows members to receive necessary health services that they wouldn’t be able to afford on their own. MassHealth is comprised of both Medicaid and the Children’s Health Insurance Program, so Massachusetts residents of all ages are enrolled in MassHealth.
But long-term care coverage is one of MassHealth’s primary benefits. MassHealth will pay for a Commonwealth resident to get the nursing-home care they need. The program also provides for its members’ in-home care needs. MassHealth will pay for home-care services for someone who isn’t at the point to move to a nursing home, but who requires more help to be able to stay in their house.
Ultimately, the program is a safety net that ensures sick and elderly Commonwealth residents are able to access the services they need, regardless of financial status.
Risks of MassHealth
MassHealth benefits allow members to access medical care, hire home health aides, afford nursing-home fees and pay for medications. But many people who will someday need these long-term care benefits don’t realize the financial toll of enrolling in MassHealth.
First, there’s the eligibility issue. Long-term care is extremely expensive, and MassHealth will only approve someone for benefits if the applicant can prove that they’re unable to afford their own care. To that end, the program has strict eligibility requirements. Applicants may only have very limited assets to qualify for coverage, and there are strict rules about how applicants can get rid of additional assets. Giving away money right before applying isn’t a viable option; MassHealth evaluates five years of an applicant’s financial history when making eligibility decisions. Only those who have complied with the program’s spend down rules will be approved for coverage.
So that’s one of the financial risks of MassHealth, but there’s another significant downside that may affect a member’s loved ones. Like other state Medicaid programs, MassHealth is allowed by law to recover its costs from its members’ estates. It can do this by placing a lien on a member’s home. If the home is sold during the member’s lifetime, MassHealth can recover its costs from the proceeds of that sale. A lien is invalidated by the person’s death in Massachusetts, but MassHealth can still recover its costs from the probate estate, and that could include the person’s home.
There are some exceptions to the MassHealth estate recovery rules. A lien will not be placed on a home if a protected relative still lives there. A spouse, child under 21, permanently disabled child of any age or sibling who meets certain conditions is considered a protected relative. It’s also important to note that if a MassHealth member dies and leaves an estate with no assets, the member’s heirs will not be responsible for repayment
But these estate recovery rules do affect a lot of Massachusetts families. Because applicants have to spend down their assets before qualifying for MassHealth, often their homes are the only significant assets they own—and the only thing they have to pass down to their heirs. Say a decedent dies leaving a house that’s valued at $200,000, and MassHealth spent $175,000 on that person’s care. The house will have to be sold and almost all of its proceeds will go to MassHealth. There will be very little, if anything, left for the decedent’s heirs to inherit.
Moving Forward with MassHealth
The fact that MassHealth enrollment can cause some financial hardship doesn’t mean Massachusetts residents should go without this coverage. MassHealth benefits may allow you to get health care that you would otherwise go without, or let you remain comfortably and safely at home instead of having to move to a nursing home. And while the financial drawbacks of enrolling can be profound, every situation is different. The program’s exemptions and rules may work in your favor.
The bottom line? Don’t make any decisions about MassHealth lightly. We encourage anyone considering MassHealth to educate themselves on the rules and criteria. Having an experienced advisor on your side is important. If you or a loved one are likely to consider MassHealth (even well into the future), we’re here to help you understand and prepare for the process.
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Ladimer Law specializes in estate planning. We protect our clients, their heirs, and their assets by listening closely, knowing the law, and executing estate plans that fit and evolve.