Don’t Risk Your MassHealth Medicaid Approval: Avoid These 3 Common (and Costly) Mistakes
Planning for long-term care can be overwhelming, especially when it comes to navigating the complex and often confusing MassHealth Medicaid system. One misstep in the process can jeopardize your application—and put your assets, your home, and your family’s financial future at risk.
At Monteforte Law, P.C., we’ve helped countless Massachusetts families successfully apply for MassHealth while preserving what matters most to them. But too often, we see clients who come to us after they've already made mistakes—mistakes that could have been avoided with the right planning and legal advice.
In this blog, we’re breaking down three of the most common pitfalls we see with MassHealth applications—and how you can steer clear of them to protect your home, your money, and your peace of mind.
1. Not Putting Your Home in a Medicaid-Compliant Trust
For many people, their home is their most valuable asset. So, it’s no surprise that one of the biggest concerns we hear is: “How do I protect my house if I need long-term care?”
Here’s the deal: When you apply for MassHealth, the state looks back at your last five years of financial activity. This is called the five-year look-back period, and it includes any transfers of money or property. If your home is still in your name—or was transferred within that window—it could be counted against you, potentially disqualifying you from benefits or delaying your approval.
The solution? Place your home into a Medicaid-compliant trust at least five years before applying. This type of trust is specifically designed to safeguard your home from MassHealth’s reach while allowing you to live in it and keep it safe for your heirs.
🛑 Common mistake: Transferring the home directly to a child. That might seem like a good workaround, but it opens you up to other risks, like capital gains taxes, disqualification penalties, and even losing the house if your child divorces or runs into legal trouble.
With a properly drafted trust, you maintain control, protect the home from nursing home costs, and ensure it’s passed down according to your wishes.
2. Not Keeping Proper Financial Records
Think it’s enough to just meet the financial requirements? Think again. MassHealth requires clear documentation of where your money has gone over the past five years. If you can’t show a legitimate “paper trail,” MassHealth may assume you improperly gave money away—and that can lead to penalties or outright denial.
Here’s what you should be keeping on hand:
- Bank and credit card statements
- Receipts for large purchases
- Invoices for services like home care or contractors
- Proof of payments (canceled checks, bank transfers, etc.)
- Notes or explanations for large withdrawals or deposits
📌 Real-life example: If you paid a neighbor $5,000 over two years to help with errands, that may seem like a reasonable expense. But without written proof, receipts, and documentation of the services provided, MassHealth could treat that money as a “gift”— and penalize you.
Cash is especially tricky. If you're withdrawing large amounts of cash or making payments that can’t be traced, you’re creating red flags that could delay or derail your application.
That’s why we advise all our clients to start tracking everything now—well before they need to apply. A folder, a spreadsheet, or even basic financial software can go a long way in protecting your eligibility.
3. Gifting Without Understanding the Rules
One of the biggest misconceptions we hear is: “But the IRS says I can gift up to $19,000 per year, so I’m good, right?”
Unfortunately, MassHealth doesn’t follow IRS gifting rules.
Any gift made within the five-year look-back period—even a birthday check for your grandchild—can be considered a disqualifying transfer. That includes:
- Financial help for a child’s down payment
- Gifts for weddings, holidays, or special events
- “Helping out” a family member with bills or tuition
Even small gifts can add up and create problems if they aren’t properly documented or explained.
⚠️ Example: If you gifted $20,000 to your daughter three years ago, MassHealth could impose a penalty period, making you ineligible for coverage. And with nursing homes in Massachusetts costing $14,000–$16,000 per month, that penalty could be financially devastating.
The safest course of action? Speak to an elder law attorney before making any financial gifts or transfers. With the right strategy, you may still be able to help your loved ones—without putting your future at risk.
Planning Ahead Is the Key to Protection
What do these three pitfalls have in common? They’re all completely avoidable—if you plan ahead.
Whether you’re five years away from needing long-term care or considering a MassHealth application now, it’s never too early (or too late) to get help. At Monteforte Law, we create custom MassHealth plans to protect your assets, simplify the application process, and give you peace of mind.
Final Thoughts
Applying for MassHealth is more than just filling out a form—it’s a process that requires careful planning, attention to detail, and a solid legal strategy. But you don’t have to navigate it alone. By avoiding these three common mistakes—failing to protect your home, keeping poor records, and gifting without guidance—you can protect your hard-earned assets and make the process smoother for yourself and your family.
📞 Ready to get started? Schedule a Strategic Planning Session with Monteforte Law today and let us help you create a plan that protects your home, your money, and your legacy.
