By Colleen Morrissey
Qualifying for Medicaid – called MassHealth in Massachusetts – can make a big difference when you need care and aren’t sure how you’ll afford it. To meet those eligibility requirements, older adults sometimes opt for what’s known as a “MassHealth spend down.”
It’s a complicated process, but here are the basics:
MassHealth coverage can mean no-cost supportive services, provided you receive them from a local Aging Services Access Point (ASAP). It also supplements Medicare’s coverage of medical costs.
However, MassHealth has strict income and asset limits for people 65 and up. Many MassHealth programs have an asset limit of $2,000 per individual – and that includes money in the bank, retirement accounts, whole life insurance policies, and stocks.
As a result, some people spend down assets to get under the $2,000 limit. But this has be done carefully!
At Somerville-Cambridge Elder Services (SCES), our Aging Information Center provides information about MassHealth and access to programs that can help you spend down. Here are some things to consider before starting:
Plan, plan, plan For starters, be sure to understand how you’ll spend the assets and when the MassHealth application should be submitted. It’s important to get the timing right, or you might have a lapse in care while waiting for MassHealth approval.
Understand MassHealth MassHealth Standard offers comprehensive coverage for those who qualify by income and assets. The Frail Elder Waiver provides coverage for people 60-and-older who demonstrate need for supportive services, which are received through an ASAP and require a nurse-administered screening. Long Term Care Medicaid subsidizes the cost of nursing facilities for residents who can’t afford the full amount.
Hire an elder law attorney If you have complex assets, are giving assets to someone other than your spouse, or are applying for MassHealth to cover nursing facility costs, consider working with a lawyer that specializes in Medicaid/MassHealth planning.
Learn which assets are exempt You’ll need to spend assets down to $2,000 or less, but MassHealth doesn’t count the home you live in, personal belongings, home furnishings, one vehicle in your name, a pre-paid burial contract or burial plot, and certain types of life insurance.
Know the insurance rules You are allowed to keep term life insurance policies, or whole life insurance policies if the total face value of those policies is $1,500 or less. You can also sign insurance policies over to funeral homes in the form of irrevocable burial contracts for funeral expenses.
Think carefully about transferring assets to your spouse When applying for the Frail Elder Waiver, you are allowed to transfer a certain amount of assets to your spouse – up to $119,220 in 2016. This makes it easier to get coverage while retaining those assets. However, if your spouse eventually needs care at home or in a nursing facility, he or she will need to negotiate the MassHealth eligibility requirements to receive care.
Recognize potential drawbacks of other asset transfers If transferring assets to someone besides a spouse, you may still be eligible for MassHealth Standard or the Frail Elder Waiver, but it might disqualify you for Long Term Care benefits in the future. Consult with an elder law attorney before transferring those assets.
Spend down the right way MassHealth looks carefully at how you spend your assets before applying, especially for Long Term Care. Make sure your assets are spent correctly by spending them only on your needs. This includes medical care, in-home supports like personal care and cleaning, home repairs, bills, etc. Assets can also be used to pay for burial and funeral expenses in advance.
Keep records If you hire in-home help but pay cash, without drawing up a contract, it won’t be clear that money was spent on care. Keep receipts and detailed records of all transactions.
Avoid care gaps A care gap occurs when you can’t afford further services but are still awaiting a determination from MassHealth. Avoid this by planning ahead. Ask if your local ASAP has a program that facilitates the transition from private pay to state-subsidized home care services. At SCES, you can start with private pay and be automatically switched to no-cost services, once approved for MassHealth. If you live in Cambridge or Somerville, contact the SCES Aging Information Center at 617-628-2601 for more information.
Those are the basics of a MassHealth spend down, but we can’t emphasize this enough: a qualified elder law attorney can be invaluable. Contact the Massachusetts Chapter of the National Academy of Elder Law Attorneys for a list of attorneys in your area online or by calling 617-566-5640.
Colleen Morrissey is an SCES Resource Specialist. SCES Elder Care Advisor Corinne Lofchie also contributed to this report.