Protecting Your Legacy: Planning for Long-Term Care and Medicaid/MassHealth Assistance in Massachusetts
Caring for Your Legacy: Navigating Long-Term Care and MassHealth PlanningYou've worked diligently throughout your life to provide for your loved ones and build a legacy—whether that legacy is in the form of savings, investments, or the home you've spent years paying off. However, as you grow older, it's natural to consider what might happen during your final years if you're no longer able to live independently in your own home or fully care for yourself.
Perhaps you've never contemplated the possibility of needing nursing home or assisted living care. Maybe you assume your family will take care of you at home for as long as necessary. While these are common assumptions, it's also common for circumstances to change unexpectedly. Health can deteriorate, and family members may face their own life changes that disrupt their ability to provide care as intended. |
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The Dangers of Not Planning for Assisted Living or Long Term Care
In the event that you or your spouse requires long term care or assisted living, you could find yourself in a precarious position. Your savings, carefully accumulated over a lifetime, may be insufficient to cover the costs. Yet, you might be ineligible for Medicaid/MassHealth assistance due to the assets you intended to leave to your loved ones.
Even more concerning is the fact that Medicaid imposes a five-year "look back" period. This means that if you take measures to protect your assets, such as giving them away or placing them in an asset protection trust, those assets may still be considered yours if the transfer occurred within five years of your application for assistance.
For individuals aged 65 to 75, now is the ideal time to plan for the possibility of long-term care, especially if you do not already have long-term care insurance.
The good news is that there are methods to plan for long-term care while safeguarding some or all of your assets for your family and still qualifying for Medicaid assistance. This can involve transferring real property and retaining a life estate or establishing an asset protection trust.
Even more concerning is the fact that Medicaid imposes a five-year "look back" period. This means that if you take measures to protect your assets, such as giving them away or placing them in an asset protection trust, those assets may still be considered yours if the transfer occurred within five years of your application for assistance.
For individuals aged 65 to 75, now is the ideal time to plan for the possibility of long-term care, especially if you do not already have long-term care insurance.
The good news is that there are methods to plan for long-term care while safeguarding some or all of your assets for your family and still qualifying for Medicaid assistance. This can involve transferring real property and retaining a life estate or establishing an asset protection trust.
Ways to Pay for Long Term Care
Traditional health insurance, such as Medicare or private insurance, typically only covers short-term stays in a care facility. If you are discharged from a hospital to recover, your insurance may cover a brief period in a care facility. However, if you require extended care, these insurance plans will not cover the costs.
This leaves three primary ways to pay for long-term care:
This leaves three primary ways to pay for long-term care:
- Paying from Your Own Assets: Paying for long-term care out of your own funds is simply not feasible for many families. Even if you possess substantial assets, like a home, the value may not translate into the cash necessary to cover care costs, which can range from $4,000 to over $10,000 per month, depending on the level of care and location.
- Long-Term Care Insurance: While long-term care insurance policies are available, they can be cost-prohibitive for individuals aged 65 or older. Moreover, these policies typically have daily benefit limits that may not cover the entire cost of care.
- Medicaid/MassHealth Assistance: Medicaid is a program that covers long-term care, but eligibility requires having very limited assets and income.
MassHealth Eligibility for Long Term Care
To qualify for Medicaid/MassHealth coverage, you must meet specific income and asset criteria. Full eligibility details are available here. In summary, you need to have assets of less than $2,000 ($3,000 for a married couple) and meet certain monthly income guidelines.
If you own a home in your name or have investments or cash savings exceeding these thresholds, you are already above the eligibility limits. For most people, this means transferring assets out of their control, either by gifting them or placing them in an irrevocable trust (further details below).
If you own a home in your name or have investments or cash savings exceeding these thresholds, you are already above the eligibility limits. For most people, this means transferring assets out of their control, either by gifting them or placing them in an irrevocable trust (further details below).
Caution: Be Aware of the Five Year Look-Back
If you choose to use any of the strategies below to protect some or all of your assets from the costs of care, be aware that Medicaid has a five year "look back." This means that any transfer you make (putting assets in trust, deeding real estate ownership to an heir, for example) has to occur at least five years before you need help with care for the transfer to protect the assets. This is why planning for long term care should happen, for most people, when they are in their sixties or seventies, not when they are close to needing assistance.
What is a Medicaid or Irrevocable Trust?
A Medicaid trust, also known as an irrevocable trust, takes the assets you place into it outside of your reach. This means that Medicaid will not consider those assets as yours when you apply for benefits. Furthermore, you cannot revoke the trust or reclaim the assets.
However, you can continue to receive income generated by the assets within the trust.
Common examples of how these trusts work include:
However, you can continue to receive income generated by the assets within the trust.
Common examples of how these trusts work include:
- If you own a home and place it in a Medicaid trust, you retain the right to live in it while you own it. If you decide to sell and downsize during your lifetime, the trust can sell the property and purchase a replacement property, but you cannot sell it and keep the proceeds.
- If you own other real estate and transfer it to a Medicaid trust, you are still prohibited from selling or taking the property out of the trust, but you can receive rental income.
- If you have investments within a Medicaid trust, you can still receive income but cannot remove the investment assets from the trust.
Are There Options Other Than a Medicaid Trust?
Yes, there are alternative options to consider when planning for long-term care while protecting your assets:
- Life Estate Deeds: You can transfer the deed to your home to your heirs while retaining a "life estate." This means you have the right to live in the property for the rest of your life. While this can achieve the goal of removing the asset for MassHealth purposes, it comes with some limitations. If you need or want to sell the property during your lifetime, you would lose the asset protection.
- Gifts: Another option is to give away assets during your lifetime. However, keep in mind that when you give away an asset, you typically do not retain any rights to it. This differs from a trust, where you can still receive income to support yourself.
Secure Your Legacy With Proper Planning
Planning for long-term care is a critical aspect of securing your legacy and ensuring your loved ones receive the inheritance you intend for them. Without a well-thought-out strategy, the cost of long-term care can erode your assets, leaving less for your heirs and beneficiaries.
Whether you opt for a Medicaid trust, a life estate deed, or other asset protection measures, it's essential to start planning well in advance. Medicaid has a five-year look-back period, which means that any asset transfers made within five years of applying for assistance may still be counted as your assets.
As you approach the age of 65 and beyond, it's the perfect time to assess your long-term care needs and develop a comprehensive plan that safeguards your legacy. An experienced attorney can guide you through the process, helping you make informed decisions and navigate the complexities of Medicaid eligibility.
Whether you opt for a Medicaid trust, a life estate deed, or other asset protection measures, it's essential to start planning well in advance. Medicaid has a five-year look-back period, which means that any asset transfers made within five years of applying for assistance may still be counted as your assets.
As you approach the age of 65 and beyond, it's the perfect time to assess your long-term care needs and develop a comprehensive plan that safeguards your legacy. An experienced attorney can guide you through the process, helping you make informed decisions and navigate the complexities of Medicaid eligibility.
Questions About Long Term Care or Assisted Living and Your Estate Plan?
Schedule a free informational callback from a member of our team to learn more about how we can help you customize your estate plan to secure your legacy in the face of long term care costs.
Meet Our Estate Planning Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna wrote a book on estate planning: The Road to Peace of Mind: What You Need to Know About Estate Planning. Jenna has helped many individuals and families with planning to protect their legacies and loved ones, and planning for the future and succession of their businesses.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and earned her LLM in estate planning from Western New England Scool of Law in 2016. She has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped many clients with planning for their legacies and their future, and navigating the probate process in Massachusetts after the death of a loved one.
How We Can Help
Our experienced team specializes in estate planning and Medicaid/MassHealth planning. We'll work with you to develop a customized strategy that safeguards your legacy, ensuring your loved ones receive the inheritance you intend for them while navigating the complexities of Medicaid eligibility. You can use the button below to schedule your free information call, or simply give us a call at 781-784-2322.