Margaret Hoag
In today’s post, I want to address some of the most common misconceptions about MassHealth.
1. I can give my children $15,000 a year.
This misconception arises because of confusion between the tax code and the MassHealth rules. Unfortunately, the federal tax regulations and the MassHealth regulations do not align. Although the federal gift tax rules allow you to give a person $15,000 per year gift tax free, that same gift is a disqualifying transfer for MassHealth.
2. I can give money to charity.
This is another example of confusion between the tax code and the MassHealth rules. The federal tax code allows a person to give unlimited amounts to charity gift tax free, but a gift to charity is a disqualifying transfer for MassHealth purposes.
3. The State will make me sell my house.
The State will never force you to sell your primary residence as a condition for obtaining MassHealth benefits. There are two big caveats, however, that may result in a sale of the home.
a) If your house has a value of more than $823,000 (after mortgages) then the house is a countable asset. Since a MassHealth applicant is only allowed to have $2,000 in countable assets, owning a property with more than $823,000 in equity makes the applicant ineligible for benefits. In order to become eligible, the applicant must reduce the equity in the home to below $823,000. You may reduce the equity by taking out a loan or reverse mortgage and spending that money on your care. However MassHealth will put a lien on your home in order to recover the money they have paid for your care.
b) The second caveat is that the State will not permit a MassHealth recipient to use any of his or her income to pay the expenses of maintaining a former home. The only time a recipient may use income to pay for a home is if the home is rented, and the rental income creates a profit, which can then be paid to the nursing home as part of the recipient’s income. Thus, some other family member must pay the taxes, insurance and other expenses of the home. If no can pay these expenses and if the home can not be rented, it is usually sold.
4. The nursing home will take my money.
We hear this comment very frequently and we feel it is important to point out that the nursing home does not take, in the sense of “seize,” anything from their patients. When you enter a nursing home, you sign a contract to pay for services and you voluntarily pay for the care you receive. When your money runs out, you agree to apply for MassHealth benefits. MassHealth sets up the asset limits and the spend-down rules. After applying for MassHealth benefits, MassHealth will review how you spent your money until your countable assets were reduced to $2,000. If you spent down improperly (by making a gift, for example) MassHealth will deny the application.
5. MassHealth is free.
MassHealth is rarely free to recipients. MassHealth recipients in a nursing home pay a potion of their regular monthly income to the nursing home. This is called the Patient Paid Amount (PPA). Every MassHealth recipient can keep $72.80 per month for personal needs. There are additional deductions such as for payment of health insurance premiums and payments to support a spouse or dependent child. The net income (after the deductions) is paid to the nursing home and MassHealth pays the difference between the PPA and the cost of care for the recipient based on the rates MassHealth has negotiated with the nursing home.
6. If I have a house, I can not get MassHealth.
This is a very common misconception and we hear it all the time even from nursing home administrators. Although it seems odd that a person without a spouse or dependent children can keep their home and still qualify for MassHealth, that is the rule. As discussed in #3 above, there is a lien on the house and the recipient is not usually permitted to pay the expenses of keeping the home.
Senior advocates have successfully argued that every MassHealth recipient should be able to keep their home so they have a place to return if they are discharged from the nursing home. Even if it is extremely likely that the MassHealth recipient will ever be able to go home, the idea that the recipient would want to go home if he or she were miraculously cured is enough to protect the house from a forced sale. Note, however, that a primary residence with equity over $823,000 is a countable asset. See #3(a) above.
7. If I run out of money, I will have to go to a nursing home.
MassHealth has several programs designed to help ill or disabled seniors remain in their homes and “age in place.” The Mass Home Care Program, the Frail Elder Waiver, the Choices program are just a few. All of these programs have income limits, however, some of which are very strict. The official position of the State is that seniors should be able to remain at home with care, so long as they can do so safely. The Department of Veterans Affairs also has a program for home care which is available to Veterans and their surviving spouses.
8. MassHealth will pay for assisted living facilities.
MassHealth does not generally pay for assisted living. There are a few programs which pay for group living at a level of care lower than that of a nursing home. Unfortunately, all of these programs have strict income limits which make them unavailable to many seniors. However individual facilities may have their own affordable housing programs or programs through the city/town which may be more generous than the MassHealth programs.
9. Only low income seniors can get on MassHealth.
As discussed above, there are income limits for all of the home care programs, but the nursing home program is more complicated. Although asset limits are enforced for MassHealth benefits in a nursing home, there is no limit on the income of the applicant. However, a higher income recipient (for example one with long term care insurance) could be subject to a complicated six-month deductible.
10. MassHealth is only concerned with my assets, not the assets of my spouse.
While the MassHealth asset limit for an applicant is $2,000, currently the spouse of an applicant cannot have assets in excess of $123,600. There are allowable options to spend-down assets to reach these limits, but this should be discussed with an elder law attorney to avoid a possible denial of benefits.
Tracy R. Casaletto contributed to this Blog Post.