The 2020 Medicaid numbers are out. For the most part, sadly, they are not very different from the 2019 numbers.
As most clients know, Medicaid is a federal program, BUT it is implemented on a state-by-state basis. In Massachusetts, Medicaid long-term care benefits are administered by MassHealth. To qualify for long-term care coverage, we are working under two sets of rules (fun, right?).
Let’s start with the federal rules.
The federal Medicaid program usually sets maximums, and minimums, for things like:
1. The amount of assets you can keep and still qualify for benefits
2. The amount of assets your at-home spouse can keep and still qualify you for benefits
3. The amount of the penalty assessed for disqualifying transfers of assets (i.e., gifts).
For a description of the 2020 federal numbers, GO HERE.
In many ways, Massachusetts is on the right side of those figures. The maximum amount that an at-home spouse is allowed to keep, while still having the nursing home spouse qualify for long-term care benefits, (called the CSRA, for Community Spouse Resource Allowance) is $128,640. That is the MAX allowed by Federal law, and Massachusetts has adopted the max. That is a lousy two grand over the 2019 figure. While that figure might sound high, think about that figure versus an entire lifetime’s worth of assets for TWO people (a married couple).
When looking at assets like bank accounts, investments, life insurance, etc., then that might actually sound very low. But on the other end of the spectrum, Massachusetts could lower that dramatically (as low as $25,728, which is the federal minimum) and still be in compliance with the federal rules. Although we should be happy that Massachusetts adopts the maximum, most of us aspire to collect much more than that over our entire lifetime. For married seniors, who have worked and saved for 65+ years, that number is a scary one. A married couple must spend down to that number before the nursing home spouse can qualify for long-term care benefits. That spend down can involve their life savings and reducing it to meet the applicable limits. Scary stuff for many of us.
For more information about the three ways to pay for long-term care, download our free report, HERE
Another federal number is the amount of home equity allowed in a primary residence and still, qualify for eligibility. Notice I didn’t mention MassHealth’s lien rights, and we are talking about eligibility only. Just because you are eligible, doesn’t mean that MassHealth can’t place a lien against the property – in most cases they can, and do. The federal home equity limit is $893,000, compared to the federal minimum of $595,000. Given the high cost of Massachusetts housing, it’s a good thing that Massachusetts matches the Federal max.
In other words, you can have home equity up to $893,000 and still be eligible to qualify. Again, MassHealth might still be able to place their lien, and if they can, they will. If you want to avoid MassHealth liens, look over our report on Medicaid Trusts.
Where does that leave us?
Well, federal rules have a maximum number of dollars that a spouse can keep, and a maximum home equity value for eligibility. Massachusetts elects to adopt those maximum limits, rather than selecting the optional lower limits, and that’s a good thing. However, let’s not forget that Massachusetts is the state with the absolute highest costs for long-term care in the country. Given how ridiculously expensive long-term care costs, and that we are measuring assets based on the lifetime savings of a married couple, the federal numbers need to be much higher. And then Massachusetts would have to follow suit, by continuing to elect the federal max.
When looking at these numbers versus your life savings, and the costs of long-term care in Massachusetts, the figures are woefully inadequate. The feds (and MassHealth) have a five-year lookback, and they can use that lookback period to find gifts and other disqualifying transfers to use against you. That’s a huge advantage on their side when trying to apply for long-term care benefits. For more information about the biggest mistakes made on a MassHealth long-term care application, download and read our free report.
On top of that, with these numbers being what they are, most seniors will struggle to be eligible for coverage, and/or spend down their life savings to qualify. Everything they have earned over their lives, gone completely, other than the $128K the government has decided they can keep. That’s a sad statement. The numbers are way too low.
Today’s seniors, many of whom are World War II veterans, are sometimes known as “the greatest generation”. Well, thanks to long-term care costs and low federal limits for coverage, they are quickly turning into the poorest generation.