Massachusetts Estate Planning & Asset Protection Blog

What Transfers Does Massachusetts Consider To Be Exempt from MassHealth Transfer Penalty Rules? (Part 2)

Yesterday we talked about the transfers of the home that are exempt from Massachusetts’s MassHealth penalty but what about assets other than the home?  The following transfers are also exempt:

1.            Assets transferred to the spouse or for the benefit of the spouse as long as the spouse didn’t then transfer them to someone else.  To be for “the sole benefit of”, the funds must be transferred to a legally binding trust created by a document providing that the funds are solely for the benefit of the spouse.

2.            Assets transferred to the MassHealth applicant’s child who is blind or permanently and totally. A determination of disability by Social Security will satisfy this requirement. This transfer can be outright to the child or to a trust.  The trust must provide that the funds be distributed to the disabled individual on an actuarial sound basis over his/her lifetime.

Click here to get a free sneak preview of the “Senior and Boomer’s Guide to Health Care Reform & Avoiding Nursing Home Poverty”, which contains information on how Massachusetts Seniors and Boomers will be impacted by the Affordable Care Act!

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com.

What Transfers Does Massachusetts Consider To Be Exempt from MassHealth Transfer Penalty Rules? (Part 1)

Not all transfers are subject to a transfer penalty.  The home in many ways gets special status, including when it comes to transfer rules.  The following transfer of the applicant’s home is exempt if made to:

• The MassHealth applicant’s spouse

• A child of the MassHealth applicant under age 21 or blind or totally and permanently disabled.

• A sibling of the MassHealth applicant who had an equity interest in the home before the transfer and was living there for at least one year before institutionalization.

• A child of the MassHealth applicant who resided in the home for at least 2 years immediately before the applicant went to the nursing home and who provided care such that if it had not been provided the applicant would have needed nursing home care.  The care must be that which requires “special attention”, rather than personal support activities and “must have been essential to the health and safety of the individual and consisted of activities such as, but not limited to, supervision of medication, monitoring of nutritional status, and insuring the safety of the individual.”   The State scrutinizes this exception closely.  Proof of the child’s residence in the home by tax return, official mail going there is needed.  Also, a certification from a medical professional as to the care needed over the 2 year period is also a requirement as well as the actual care provided by the child.

At the Estate Planning & Asset Protection Law Center, we help people and their families learn how to protect their home, spouse, life-savings, and legacy for their loved ones.  We provide clients with a unique educational and counseling approach so they understand where opportunities exist to eliminate problems now as they implement plans for a protected future.

To gain free online access to the Complete Alzheimer's Resource Kit, which contains care tips as well as other useful information on Alzheimer’s disease, please visit www.BostonMemoryLawyer.com. 

We encourage you to attend one of our free educational workshops, call 800-964-4295 and register to learn more about what you can do to enhance the security of your spouse, home, life savings and legacy.

When Does MassHealth's Penalty Start?

Massachusetts determines that the MassHealth penalty begins when the applicant is below $2000, is in need of nursing home level care and applies for MassHealth, that is to say, the applicant is otherwise eligible for MassHealth “but for” the transfer of assets.

For example, if one transferred $140,000 without receiving anything of equal monetary value in return, within the five years immediately preceding the MassHealth application, the transfer penalty is 18 months.  The penalty does not begin until the applicant applies for MassHealth and meets all other qualifications “but for” the transfer of assets.

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We developed our Unique Self-Guided 19-Point Trust, Estate, & Asset Protection Legal Guide, so you can learn where problems may exist in your planning as well as opportunities for improvement and how to implement a plan to protect your spouse, home, family, and life savings. 

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com. 

Earlier this week I was telling you about Ron.  His Dad transferred his home to Ron, who currently is disabled but was not at the time of the transfer.   I explained to Ron that the transfer, contrary to what he believed, is subject to a Medicaid transfer penalty of 51.5 months if Dad applies for Medicaid now.  I had an idea of how we could fix it.

But, before I shared that with him I asked Ron a few more questions.  “Who has been paying the taxes and upkeep on the home?”, I inquired.  Ron told me that until he moved into the home a year ago, Dad was paying all those expenses.  He transferred money to Ron who then paid those expenses out of his own checking account.

Again, I told Ron that up until the point in time that he was deemed disabled by Social Security, those transfers would be subject to a Medicaid transfer penalty.  So, adding those amounts to the $400,000 home transfer would increase the penalty further.

Ron was really panicking now.  I told him to hold on.  I had a solution.  “What we need to do is have you transfer these assets back to Dad now, including the home.  We could then have Dad transfer the assets right back to you”, I told him.

I know you are reading this and saying to yourself, “that can’t be right”.  However, the transfer back to Dad will undo the potential transfer penalty.  And then the new transfers from Dad to Ron will fall within the disabled individual exception.  It is critical that this all be done, however, before filing a Medicaid application.

Ron was confused and amazed at the same time.  He understood what I was saying although it seemed crazy to him.  But, that’s how the Medicaid rules are, complex and bizarre at times.  Had Ron not called us when he did to hire us to handle Dad’s Medicaid application, he would, in all likelihood, have been faced with a lengthy penalty with no idea of how to fix it.  And because it can take 4 to 6 months after the initial interview before the State actually reviews your application, Ron would not have learned of his mistake until he ran up tens of thousands of dollars of nursing home bills. 

No one wants to be in that type of a mess.  Ron was lucky he got the right advice at the right moment from someone who knows the complexities of the Medicaid rules.  As they say, timing is everything.

To gain free online access to the Complete Alzheimer's Resource Kit, which contains care tips as well as other useful information on Alzheimer’s disease, please visit www.BostonMemoryLawyer.com. 

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com

The last 2 weeks we were discussing the transfer of a home to a child who has been living with the parent in that home.  But, what about transferring the home to a disabled child?  Isn’t that an exception to the Medicaid transfer rules?

The answer is yes, but like all things Medicaid related, it is tricky.  A few weeks ago Ron called me with regard to his dad who needs nursing home care and will run out of funds to pay for it in 2 months.  Ron will need Medicaid for Dad.  He told me that 4 years ago Dad transferred his home to Ron.  I told Ron that this is a transfer subject to a Medicaid penalty unless Ron is blind or permanently and totally disabled. 

“No problem”, Ron said.  “I am disabled.”  Well, not so fast.  I explained to Ron that the disability determination must be made either by the Social Security Administration or the Disability Review Unit of the State of New Jersey’s Division of Medical Assistance and Health Services.  Ron told me he receives Social Security Disability payments.  I then asked him how long he has been on SSD.  His answer was about 2 years.  “That’s a problem”, I said.

I asked Ron to go back through his records and provide me with a copy of his approval letter from Social Security.  Sure enough, when he faxed that letter to me I saw that he was deemed disabled a full year after Dad transferred the house to Ron.  “Does that matter”, he asked.  Absolutely.  In order for the transfer to fall within the disabled child exception, Ron must have been disabled at the time of the transfer.

Ron told me the house is worth approximately $400,000.  At that value, the transfer penalty is 51.5 months, meaning Ron would have to pay for Dad’s care for that long before Medicaid will cover him.  So is that it?  Must Ron sell the home that he now lives in and spend down those assets?  Maybe not.  Later this week I will reveal what I told Ron.

For more information about Medicaid, you can gain free online access to the “Seniors’ Guide to Health Care Reform & Avoiding Nursing Home Poverty” which also contains secret benefits revealed by the Affordable Care Act.

At the Estate Planning & Asset Protection Law Center of Dennis Sullivan & Associates, we help people and their families concerned with losing their homes and life savings to increasing medical and nursing home costs, taxes and the costs and time delays of probate. We also protect clients from losing control of their own health and financial decisions.

We encourage you to attend one of our free educational workshops to learn more about our process and what you can do to enhance the security of your spouse, home, life savings and legacy. To register for a seat at an upcoming workshop call (800) 964-4295 (24/7) or register online at www.SeniorWorkshop.com.