MassHealth estate planning is some of the most complicated work that we do here at Monteforte Law.
Why? We know better than anybody how strict government regulations can be, especially when it comes to government-run aid programs. Medicaid, run by MassHealth in Massachusetts, is no exception. Since the Medicaid program is a federally funded program administered by the individual states, the states are themselves subject to rules and regulations imposed by federal mandate. One such rule requires states to recover certain Medicaid funds paid out on their behalf. Even if the state does not want to seek such recovery, they are forced to follow the federal regulation. This mandate was the topic of a recent Issue Brief from Justice in Aging, the National Academy of Elder Law Attorneys (NAELA), and other advocacy organizations. The brief opposes the mandate and instead advocates for either the elimination of the mandate or state choice in the recovery requirement.
So how does this all work?
Well, assume that you’ve gone through the process of applying for Medicaid/MassHealth and that your application was approved. Great, one hurdle down! Now also assume that you still own your home. MassHealth can (and will!) place a lien on your property if they are paying out long-term care benefits for you. A lien is a legal tool that basically asserts a creditor’s rights to collect money they are owed. With this lien in place, MassHealth can collect any money paid out on your behalf either when the property is sold during your lifetime, or even out of your estate after your death. It is specifically this latter recovery method that Justice in Aging and NAELA oppose in their brief, and which I echo here.
As the brief points out, you’ll only qualify for Medicaid if you have very few assets in your name. If you are over the asset limit, Medicaid requires you to spend down your assets before you will be eligible for any long-term care benefits. There are very few assets that are exempt from the spend-down requirement, one being your primary home. For many of our clients, their home is their single largest asset. Perhaps even more importantly, it is a dream for many to purchase their own home and pass it onto their family. When MassHealth has a lien on the property, however, passing the home or its value onto the family can become an impossibility. A family dealing with the death of a loved one is left even further devastated when MassHealth comes looking for repayment. All of a sudden, the family home that was always intended to be passed down is gone. This is a nightmare situation for anyone to go through and something we try to help all our clients avoid through proper planning.
Compounded with the personal impact of Medicaid estate recovery claims are also the broad societal consequences of the mandate. This is where Justice in Aging and NAELA focus most of their argument against the practice. It’s easy to imagine Medicaid’s argument in favor of estate recovery claims—the more money they have in the coffers, the more people they can help by providing long-term care benefits. But this argument fails to account for the big picture issues, and also fails to acknowledge that the amounts recovered under the mandate are negligible after considering the time and effort put into the recovery. Again, remember that Medicaid is only available to those with few assets in the first instance. This means that Medicaid is seeking recoupment of claims from families of modest means. For a family already experiencing poverty, the loss is especially significant and serves only to further destabilize the family’s financial circumstances. As the NAELA brief points out, this destabilization is often far-reaching, affecting low-income neighborhoods on a larger scale. Especially significant is the disproportionate impact the practice has on people of color who have suffered at the hands of discriminatory housing policies for generations. After understanding the consequences of continuing with estate recovery claims, it is difficult to support the mandate.
Estate recovery claims are a particular concern in Massachusetts because of the manner in which they are calculated.
Massachusetts uses the “total capitated rate” to calculate the amount of the lien. The “total capitated rate” is the cost that MassHealth determines is required for one month of care. This rate is used to calculate the amount of the lien even if the actual cost of the coverage you received was less than the predetermined rate. Considering the individual and societal impacts discussed above, it hardly seems fair for the state to recover funds in the first place. It is especially objectionable, however, when you consider that MassHealth might be recovering funds from your estate when the actual cost of the care you received was far less than the recovered amount.
Wondering if there’s anything you can do to protect yourself and your family?
The first step is to see an attorney who specializes in estate planning. It is an estate planner’s job to help our clients plan for the future and protect their assets for their families. We know how hard you’ve worked to make a living for yourself and your family, and we understand the importance of passing as much as you can onto the next generation. If it is early enough, we can walk you through various planning tools and options, such as a Medicaid Trust, that can help to protect your assets in the event you need Medicaid coverage in the future. Don’t wait too long, though—Medicaid has a five-year lookback period that you need to bear in mind when doing any planning. Can’t wait five years and you need Medicaid now? That’s alright too—there are several planning tools that we can use to try to preserve as many of your assets as possible, or at least make your assets last longer.
Medicaid planning is extremely complicated, and if done incorrectly or by someone inexperienced can actually render you ineligible for Medicaid. Don’t hesitate to have a specialist on your side!