Long-Term-Care-Planning

We can provide assistance with crisis planning if a loved one is about to go into a nursing home or is already in the nursing home. We can do the following:

  1. Prepare the Mass Health application
  2. Work with the nursing home
  3. Assist in asset transfers
  4. Assist in applying for immediate annuities to protect the excess assets
  5. Assist in applying for a pooled trust to protect excess assets
  6. Employ other asset protection strategies

Long Term Care Planning

We also assist clients when their families have long term goals to protect assets from future potential nursing home costs, such as irrevocable trusts, qualifying for PACE programs, life estates and other longer term asset protection strategies.

We also review client’s existing estate plans to make sure their plans are up to date with changes in laws so that family members have the most up to date tools to assist family members in their decline when they need assistance navigating the complexities of long term care.

We work with care managers, financial planners, realtors and insurance agents in the area whom we trust to assist you in your or your family’s unique situations.

On our website we have also provided some of the Medicaid long term care financial rules as a guide for perspective clients.  See below.

Mass Health Asset Rules

The basic rule of nursing home Mass Health (MassHealth) eligibility in Massachusetts is that if one spouse went in a nursing home, he or she could have no more than $2,000.00 in “countable” assets in his own name. 

The community spouse – the spouse at home – would be able to keep the following:

  1. The principal residence, if the spouse at home still lives in the house;
  2. One automobile (if needed for essential daily activities);
  3. Household belongings and jewelry;
  4. Cash-value (whole) life insurance policies with a combined face value no more than $1,500.00;
  5. Term life insurance;
  6. A cemetery plot; headstone; casket; and an irrevocable burial contract with a funeral home; and
  7. The resource allowance of all cash assets owned by the spouse at home is $148,620.00. This amount increases by inflation annually.
  8. The nursing home spouse is allowed to keep only $2,000.00.

1. The Asset Allowance

Under Massachusetts regulations, the amount the community spouse can keep, the “spousal share,” is determined as of the beginning of the most recent period of “institutionalization.” That date is usually that person’s last Medicare covered day in the nursing home.

If you did not do any Mass Health planning, MassHealth would require you to spend all. If both of spouses enter a nursing home and apply for Mass Health, you may each keep only $2,000.00 – a total of $4,000.00.

If both of you enter a nursing home and apply for Mass Health, or one spouse dies and the other goes into a nursing home, the surviving spouse may keep only $2,000.00. When the remaining spouse has to go into a nursing home for long term care is when your house is at risk of being used to pay for your nursing home care.

2. Crisis Planning If One Spouse Went Into A Nursing Home - Immediate Annuity

If one of you went into a nursing home for permanent long-term care, the spouse at home would have to move all assets into his or her name alone. Mass Health allows transfers between spouses without any penalty.

The community spouse would set up an immediate annuity with all of you and your spouse’s excess cash assets over $150,620.00. This

An immediate irrevocable un-assignable annuity would pay out a set monthly amount to the community spouse for her life expectancy, converting those excess assets to a stream of income for the community spouse. 

This annuity would not have to be paid for the nursing home spouse’s care. After the annuity is set up, the nursing home receives only the nursing home spouse’s pension and Social security, and Mass Health pays the rest of the nursing home spouse’s monthly nursing home bill, saving the community spouse thousands of dollars each month.

This single premium immediate annuity must meet the following criteria for MassHealth:

  1. Irrevocable and un-assignable;
  2. Actuarially sound – (as determined in accordance with the actuarial publications of the Chief Actuary of the Social Security Administration);
  3. Provide payments in equal amounts during the term of the annuity, with no deferral and no balloon payments made;
  4. The value of projected payments of the annuity equal or exceed the purchase price; and
  5. MassHealth is the primary beneficiary to the extent that MassHealth benefits are ever paid out for the nursing home spouse or the community spouse. 130 C.M.R. section 520.007(J)(1)(b), and Dermody.

The annuity becomes in a sense a mini pension for the spouse at home. Those funds are turned from countable cash assets to a stream of income for the spouse at home. The community spouse is required to name MassHealth as the primary beneficiary to the extent she ever applies for MassHealth, and his or her own contingent beneficiaries.

3. Mass Health Transfer Rules For Both Spouses

Spouses can transfer to each other without any penalty when applying for Mass Health.

If you want to protect assets for your children’s inheritance from potential future nursing home costs, if you transfer of assets out of your names to your children or an irrevocable trust, that transfer is subject to the Mass Health transfer disqualification rules.

If either spouse applied for Mass Health to pay for his/her nursing home costs, they both must disclose all gifts made to an irrevocable trust or directly to your children within five (5) years from the date they are applying for Mass Health long term care benefits.  This is known as the “look back” rule.  Mass Health requires states to enforce a period of Mass Health ineligibility for transfers of assets at less than fair market value under this “look back” rule.

Under the Mass Health transfer disqualification rules, if you gift money or real estate outright to your children or into an irrevocable trust, both or you are disqualified from receiving Mass Health long-term care nursing home benefits for 5 years from the date of transfer. For every $12,810.00 you transfer outright to your children or to an irrevocable trust, you are disqualified from receiving Mass Health benefits for one month, up to a maximum penalty period of sixty (60) months or five (5) years.

If you transfer assets and then, for example, four years later require nursing home care and want to apply for Mass Health, you must wait the entire five-year disqualification period before you can apply for Mass Health. There is no proration of the penalty period even if you gave away assets that disqualified you for less than five years.

Cashing in your IRAs to qualify for Mass Health could be more detrimental than paying privately for your care.  Depending on the tax bracket you are in, you could pay more taxes than you would have paid privately paying for care.  This action should be carefully considered and reviewed by an attorney and an accountant before cashing in any IRAs.

4. IRA – The silent taker of your money if one of you needs long term care

Cashing in your IRAs to qualify for Mass Health could be more detrimental than paying privately for your care.  Depending on the tax bracket you are in, you could pay more taxes than you would have paid privately paying for care.  This action should be carefully considered and reviewed by an attorney and an accountant before cashing in any IRAs.

5. Take more than your minimum MRD from your retirement assets.

I always recommend to clients with significant retirement assets to take more than the required minimum distribution from their retirement accounts annually and possibly group one tax bracket as you are retired and now in a lower tax bracket. You may pay more in income taxes to cash in a $375,000.00 IRA to set up an immediate annuity to qualify for nursing home Mass Health than you would for the monthly private cost of a nursing home in a crisis.

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Compassionate Legal Services for Life Care Planning and Elder Law

40 Kenoza Ave
Haverhill, MA 01830
contact@faithdelaneylaw.com
Fax: (978) 374-5885