Massachusetts Estate Planning and Elder Law

Setting Up A Burial Account In Massachusetts

Under Medicaid, or MassHealth, regulations, the applicant is allowed to have $1500.00 in a "Burial Account."  However, if you go down to your bank and ask to open a "Burial Account", they may look at your strangely and not know what you mean.  When this happens to my clients, I tell them to go back to the bank and request to open a Savings Account.  Many times a bank will allow you to name the account, if they do simply have the account named "Burial Account."  If you cannot name the account, that is ok.  You will report it to Medicaid as a Burial Account, and they will send you back a piece of paper to sign indicating that you understand that you cannot spend the money in the account on anything except your burial. 

This is one of the easier aspects of applying for Medicaid.  If you find you have more complex issues, or just want someone else to handle everything, feel free to call me about setting up a consultation. 

Information Needed for MassHealth (Medicaid) Application

If you or a loved one find yourselves needing to apply for Medicaid (also called MassHealth) coverage for a nursing home stay, or think you might have to in the future,  you must be prepared for the extensive amount of information required by MassHealth. The following is a list of documentation you will be asked to provide with the MassHealth Application, and you could be asked for more:

1. Copies of birth certificates, driver's license or citizenship papers.  If you were born in a foreign country, these can be difficult to obtain, and obtaining copies of citizenship papers can take time.
2. Copies of all health insurance cards including Medicare.
3. Copies of at least 3 months of bank statements for all bank accounts, including those you share with another person, and accounts which have been closed in the last 3 years.  This means checking, savings, money market, CDs, and passbook accounts.  You will also need to provide an explanation of all withdrawals over $500.00 (and sometimes lower amounts).   You may also be asked for records of where certain deposits came from. 
4. Proof of all income.
5. Copies of the first page of all life-insurance policies, and a letter from the insurance company regarding the cash value of certain policies.
6. Proof of value of stocks, savings bonds, mutual funds.
7. Copies of annuity contracts.
8. Copies of deeds, current tax bills and amounts owed on all real property that you have an interest in - whether it it your principal residence, a vacation home, or a life estate that you hold in certain property. 
9. Copies of the registration for each vehicle, proof of outstanding loans and the current value.
10. Copies of funeral trusts, burial accounts or prepaid funerals.
11. Copies of any trusts of which you are the grantor, trustee or beneficiary, and documents showing financial activity of the trust.
12. Copies of proof of your at-home spouse's living expenses.
13. Documentation and explanation of any transfers you made in the last 36 months of any funds or property.
14. The last two years of tax returns.
15. Clinical information on the applicant, which must be sent in by the facility. 

After the application is filed, there will be a request for more information mailed to you which will often require further explanation of certain things like deposits for withdrawals, proof of certain transactions,  and updated statements for all accounts.  You will have a limited amount of time to get this additional information to MassHealth, and it must be received by MassHealth by the date indicated or it could impact your eligibility.   

It's a good idea to keep your records up to date, and not discard any old passbooks from closed accounts, or bank statements.  Even if you don't need assistance now, you may in the future, and it will save time if you have easy access to your records.  It will also save your family time if they have to take over management of your assets at some point in the future or apply for Medicaid on your behalf.

I provide assistance in preparing and filing MassHealth Applications.  Please call me to set up a consultation if you need assistance with this process, or if you think you or a loved on may need to file a MassHealth Application in the future. 

Medicaid (MassHealth) Eligibility Rules

I have set out below some of the Long Term Care MassHealth Eligibility requirements in Massachusetts. These guidelines apply to people who are over 65 and who are in a nursing home, or will be when they are receiving MassHealth coverage. 

Asset Limits

• The applicant may have $2000.00 in countable assets. 
• If married, the applicant's spouse, living in the community, may keep: $101,640 [$99,540.00 in 2006]  in countable assets. This amount may be increased as a result of an appeal.

Now, what is meant by "countable" and "non-countable"?

Countable assets include, but are not limited to: 

• cash, most savings bonds, retirement accounts, CD's, stocks, mutual funds, bank accounts,
• the home of a single applicant, in certain circumstances, see below for treatment of the home;
• a second home, or a vacation home.

Non-Countable Assets are:

• the home of the community spouse, see below for treatment of the home;
• the home of a single applicant, in certain circumstances, see below;
• a vehicle;
• irrevocable burial trusts, or prepaid funeral contract;
• life insurance policies if the total face value for each spouse is $1500.00 or less.  Term life insurance policies are not counted;
• burial plots;
• up to $1500.00 set aside in a burial account for the applicant and the applicant's spouse.

Special Rules for the Home

• Your home is not countable if you have moved to a medical facility and
  • you intend to return home,
     
  • you have long term care insurance that meets certain requirements, or
  • certain relatives, such as a spouse or disabled or minor child, live in your home.

• If the equity interest in the home is over $750,000.00, you may be ineligible for payment of long term care services, unless one of the following relatives lives in your home:
  • your spouse;
  • a permanently and totally disabled child;
  • a blind child; or
  • a child under the age of 21.

How income is treated by MassHealth:

• An applicant's income will usually be applied towards the care they are receiving in the facility, this is called the Patient Paid Amount.
• An applicant is allowed to keep $60.00 per month for personal needs.
• If an applicant pays for health insurance, they will be able to deduct this amount from their Patient Paid Amount. 
• The spouse at home does not have to contribute any of their income towards the cost of the applicant's care.
• The spouse living in the community may be allowed to keep some of the applicant's income, depending on the spouse's income and shelter expenses (the cost to maintain the home.)

There are additional rules that may apply to your situation. You can find more information on the MassHealth Programs on the Mass.gov website. 

Protecting Your Money - but from what? and for what?

I often have elderly clients or their children in my office, or talking to me at a senior center and saying "I want to protect my money" or "we want to protect mom's money, should we start giving it away now?"  Sadly, they aren't usually talking about protecting it from scam artists who prey on the elderly,  from their mom or dad's home shopping channel habits, or from children who are looking to be the recipient of this "protected" money. 

When I ask them what they want to protect it from they say "the government."  These are not people who are worried about the estate tax, these are people who are worried about the government taking all their money if they have to go to a nursing home.  They have seen articles for ads about Medicaid Planning or heard about Asset Protection, and they think the best way to plan for the future is to start giving money away.  Recent changes to the law have made it more difficult to gift money as part of the planning process, and it might not always be in the client's best interest. 

Rather than protecting your (or your parent's) money, my focus is first on protecting you (or your elderly parent.)  This means making sure that there is enough money to take care of you in your home, if that is where you wish to be, or to pay for an assisted living facility.  There are lots of options and choices between being at home and healthy, and having to be admitted to a nursing home.  Keeping your money allows you the most freedom to choose between the different options, and to receive the care you deserve. 

Medicaid Changes - Part 2

Elder law is not just about Medicaid (MassHealth) planning; very few people actually end up needing long term nursing home care. However, for those who need it, and their spouse left behind in the community, the changes to the Medicaid rules make a big difference in the different strategies used.  I posted about changes to the look-back period and transfer penalty start date few weeks ago, and here are some of the additional changes.

I will say that I don't think that having to pay privately for nursing home care should try to be avoided at all costs, and many clients agree. They want to pay their fair share while not impoverishing their spouse or being unduly penalized for gifts they made to children or charities when they had no idea they might need nursing home care in the future. The Medicaid reimbursement rate to nursing homes is very low, and without the private pay rate nursing homes would not be able to survive. Remember, these are the people that will be taking care of you and your loved ones at a time when you are most vulnerable. They are not "the government trying to take all your money", they are medical and nursing care providers trying to do the best they can for their patients in a very broken system.

Annuities
Annuities are sometimes used as a planning tool by an unmarried institutionalized person, the person in the nursing home. By purchasing an annuity with excess funds, the person qualifies for Medicaid coverage. The income from the annuity goes to pay the nursing home every month, with the additional cost of coverage paid for by Medicaid. When the person dies, the beneficiary named on the annuity receives the remaining funds. This is usually a child or non-spouse partner.

The new law requires that the state be named as the remainder beneficiary (after any spouse  or minor or disabled child) for the amount equal to the funds paid on the deceased's behalf. Query, is this necessarily a bad thing? True, that person's children won't receive the inheritance they might have had their parent not required nursing home care, but the parent could just have easily chosen to spend their money on travel around Europe or leave it all to a charity. And, there is a built in protection for a spouse or minor/disabled child.

It is not clear in the new law whether an annuity purchased by the community spouse when they were healthy would be required to name the state as a remainder beneficiary if the CS eventually went into a nursing home.

Home Equity
Under the new law, individuals cannot...

Changes to Medicaid Law

In the 80’s and 90’s the myth of the “welfare queen” led to punitive and sometimes harmful changes to the welfare rules.  Well, the so-called “welfare queen” has aged, and is now apparently a “millionaire on Medicaid,” leading Congress to pass the Debt Reduction Act which will have potentially devastating effects on middle income elders who have the bad luck to need nursing home care, and on nursing homes themselves. 

The changes to the Medicaid provisions of the DRA include postponing the penalty period start date and increasing the look-back period.
Currently, transfers of assets for less than fair market value will result in a corresponding ineligibility period for Medicaid coverage of nursing home care. Right now, the ineligibility period starts at the date of transfer, meaning that if you gave approximately $7000 to your child, you would be disqualified from Medicaid coverage for one month (Massachusetts considers $7000 to be the approximate cost of one month of nursing home care). However, you could plan ahead and be sure to keep enough money to pay for one month of nursing coverage (usually between $6000-$9000/month) if you should need it.  Upon applying for Medicaid, they will “look back” 3 years to see if you made any transfers of this nature, or five years if you made any transfers to a trust.
Under the new regulations, the penalty period starts at the later of