How do I include state and federal insurance into my estate plan?

On Behalf of | May 1, 2023 | Estate Planning

If you are a Massachusetts resident who receives MassHealth, Medicaid or Medicare benefits, you may wonder how to include these programs into your estate plan. But, once you know the basics of these programs and how they affect your estate planning options, incorporating them is not such a mystery.

Government-funded health care programs

MassHealth, Medicaid and Medicare are government-funded health care programs that provide coverage for various medical services and expenses. MassHealth is the name of the Medicaid program in Massachusetts that provides health care for low-income individuals and families. Medicaid is a federal-state partnership that offers health care for people with limited income and resources. Medicare is a federal program that provides health care for people who are 65 or older, disabled or have certain chronic conditions.

Eligibility requirements

Each of these programs has different eligibility requirements, benefits and costs. Depending on your income, assets and health needs, you may qualify for one or more of these programs. However, you should also be aware of the potential impact of these programs on your estate plan.

Estate recovery

One of the main issues to consider is the possibility of estate recovery. Estate recovery is the process by which the state or federal government can seek reimbursement from your estate for the benefits you received from MassHealth, Medicaid or Medicare. This means that after your death, some or all of your assets may be used to pay back the government for the health care costs it covered for you.

To avoid or minimize estate recovery, estate planning strategies can be used to protect your assets from the government claiming them. For example, you can create a trust that can hold your assets and provide income and support for your beneficiaries without affecting your eligibility for MassHealth or Medicaid. You could use a life estate deed that can allow you to transfer your home to your heirs while retaining the right to live in it for the rest of your life. These are just some of the options that may be available to you, depending on your situation and goals.

Fraudulent or abusive practices

However, you should also be careful not to engage in any fraudulent or abusive practices that could jeopardize your benefits or expose you to penalties. For example, you should not transfer or give away your assets within five years of applying for MassHealth or Medicaid. This could trigger a penalty period during which you would be ineligible for benefits. You should also not hide or conceal any assets or income that could affect your eligibility or cost-sharing obligations.