Nursing Home and Medicaid Planning

Attorney Jim Harrington

If you or a loved one might benefit from nursing home and Medicaid planning, contact me by email or at the numbers below to schedule a consultation. We will discuss your situation and determine if nursing home and Medicaid planning might be appropriate.

There is no charge for the initial consultation.

Appointments at a your home or the home of a family member may be made on request as appropriate.

978-454-3800 / 978-458-4501

Nursing Home and Medicaid Planning involves creating an estate plan designed to preserve your assets in the event that you (or a spouse) require long term nursing home care. To understand why such planning is necessary, you need to have a general understanding of what happens if you (or a loved one) require long term nursing home care. While many of us have heard stories and ads warning about nursing homes taking all of your assets or all of the assets of your loved ones, few of us really understand how it all works. Hopefully the information below will give you a better understanding how the system works and why planning in advance should be considered to save you and your loved ones from losing substantial assets in the event that a nursing home stay becomes necessary.

Nursing Home Care

First off, nursing home care is expensive. Very expensive. The typical monthly cost of a nursing home in Massachusetts is $10,000 - $12,000. Unlike other health care needs, healthinsurance and Medicare do not cover long term care in a nursing home. Medicare will cover only the first 100 days, after which, for the vast majority of us (with a limited exception for those with qualified long-term care insurance), the only available option to pay for the nursing home is to apply for Medicaid long-term care coverage administered through MassHealth. This is where the trouble begins. Before an applicant will qualify to receive coverage through MassHealth, the applicant (or the couple if married) must exhaust all of his or her “countable” assets until meeting MassHealth’s asset limitations.

MassHealth Asset Limitations

Single Person

Before a single person applying for coverage will become eligible, he or she must first spend all but $2,000 of his or her assets. In other words, the applicant must liquidate all of his or her assets (including IRA’s and other retirement assets) and pay the nursing home costs out of pocket until the applicant has no more than $2,000 plus the following, which are not considered countable assets:

  • Life insurance with no more than a $1,500 cash value
  • Prepaid funeral arrangements
  • $1,500 for burial expense account
  • Personal belongings
  • Married Couple

    If one spouse in a married couple requires nursing home care, but the other spouse does not, the spouse not entering the nursing home and remaining in the community (the “community spouse”) may keep the following noncountable assets:

  • Up to $117,240
  • 1 car
  • Life insurance with no more than a $1,500 cash value (1 for each spouse)
  • Prepaid funeral arrangements for each spouse
  • $1,500 for burial expense account for each spouse
  • Personal belongings
  • The couple’s primary residence (up to $828,000)
  • All other assets will need to be liquidated and spent before the spouse entering the nursing home will qualify for MassHealth.

    Income Limitations

    There is no limitation on how much an applicant or spouse may earn, however, the vast majority of the applicant’s income will have to be used to pay for his or her nursing home care. The community spouse may, in some cases, keep a small portion of the applicant’s income upon a showing of need, however, the amount that the community spouse may keep is seldom sufficient to maintain the quality of life to which the spouse is accustomed.

    The “Look Back Period”

    Currently, the so-called “look back” period is 5 years. What that means is that MassHealth will conduct a review to determine whether the applicant or the applicant’s spouse gifted or transferred any asset for less than market value for the full 5 year period prior to the date of application. Every $9,000 of assets gifted or transferred for less than market value during the look back period will result in a disqualification period of 1 month. By way of example, if a $270,000 home were given to the applicant's child 3 years prior to application, the applicant would be ineligible for nursing home coverage from MassHealth for a period of 2 ½ years.

    What can be done to protect my assets?

    Advance Planning

    The best way to protect your assets is by advance planning. Advance planning involves creating an estate plan well in advance of the time that you or your spouse requires nursing home care. By creating the plan and making appropriate transfers in advance of the look back period, the family home, vacation home and other substantial assets may be protected and preserved for your family. While the use of irrevocable trusts are common with many estate plans prepared in advance of the expected look back period, each plan must be tailored to the needs, assets, goals and circumstances of each individual client. Advance planning will allow the maximum amount of asset protection and control for the client.

    Last Minute Planning

    Even in cases where advance planning has not been done, there are steps that can be taken to help protect assets. Though a last minute plan may not be as effective as advance planning, we may still be able to preserve a substantial portion of your assets. You should never submit an application for Medicaid coverage without at least consulting with us. Too often we hear from clients after they have applied on their own and spent down substantial assets, only to find that much of the spend down could have been avoided and their assets protected had they come to us first.

    When should I start planning?

    As a general rule, if you are over 62 or if you, your spouse or a loved one has medical issues that may indicate the need for long term care at a relatively young age, we recommend you contact us for a consultation. We will provide a free initial in-office consultation during which we can quickly assess your needs for nursing home and Medicaid planning.