MassHealth can help people pay for their long-term care, but its financial eligibility requirements are strict. To qualify, an applicant must fall below a certain threshold in terms of assets and income. And to make this even more strict, MassHealth has a so-called lookback period, in which the program reviews the applicant’s financial records over the previous five years.
The policy behind the lookback period is meant to discourage wealthy people from simply transferring their assets to friends or family members so as to qualify for MassHealth. In practice, it means that an applicant who made impermissible transfers of assets during the lookback period may face large financial penalties.
Fortunately, certain types of transfers are permissible.
MassHealth planning
Millions of American seniors rely on Medicare for their health care. Unfortunately, Medicare does not pay for many of their long-term care needs. For that, many seniors must rely on Medicaid, which is known as MassHealth in Massachusetts.
Generally speaking, the MassHealth program is meant for people who do not have the assets to pay for long-term care on their own. At the same time, long-term care can be extremely expensive. This means people who do not qualify for MassHealth can easily use up their savings paying for their care, leaving them with little to pass on to their loved ones.
It takes careful planning to avoid this fate. For many Massachusetts residents, trusts provide the best way to preserve assets while maintaining eligibility for MassHealth. However, another important aspect of this planning involves knowing what types of transfers are permissible during the lookback period.
Permissible transfers
MassHealth applicants are not penalized for certain transfers to:
- A spouse: An exemption known as the Community Spouse Resource Allowance allows an applicant to transfer a specified amount of assets to a spouse who is continuing to live independently. The amount is limited, and varies from year to year. It’s important to seek out knowledgeable advice about making such a transfer.
- Debt: An applicant is not penalized for paying off debt during the lookback. This includes paying a mortgage.
- A disabled child: The applicant can transfer assets to their child if the child is disabled and under 21, and if the assets are intended to pay for their care. However, it’s wise to set up a trust to pay for a disabled child’s care.
- An adult child caregiver: If an applicant’s adult child has lived with them as their primary caregiver for the two years prior to transferring the home to the child, the applicant is not penalized for the transfer.
- A sibling: If an applicant’s sibling is living with them as a co-owner, the applicant may not face a penalty if they transfer their portion of the home to their sibling.
Massachusetts residents who anticipate needing long-term care can speak to experienced professionals about their options.