Whether you realize it or not, there is a very good chance that you will need to qualify for Medicaid at some point in your life, most likely during your retirement years. When that time comes, if you failed to plan ahead, your hard-earned assets could end up at risk. If you live in Massachusetts, you need to understand the eligibility rules for Medicaid in Massachusetts now so that you will qualify down the road if you need benefits. Moreover, you need to work closely with an experienced Massachusetts estate planning attorney to ensure that you include Medicaid planning in your overall estate plan.
Why Would You Need to Qualify for Medicaid?
Like many people, you probably have a vague idea of what Medicaid is and what benefits the program offers; however, you may go your entire working years without ever even trying to qualify for Medicaid benefits because you are already covered by employer sponsored health insurance. Once you enter your retirement years though, that may all change because of the need to pay for long-term care. At age 65 you stand a 50-50 chance of needing long-term care at some point in the future. If you are still around at age 85 those odds increase to a 75 percent chance of needing long-term care before you die. Long-term care is not cheap. On the contrary, a month stay in a long-term care facility in Massachusetts in 2015 ran, on average, about $12,000. That makes the cost of a year in long-term care close to $150,000. With the average length of stay in long-term care at 2.5 years, you could be looking at a bill for over $350,000! Right about now you are wondering why you need to worry about the cost – after all, you have health insurance and Medicare. Unfortunately, most health insurance policies exclude long-term care costs unless you paid for a long-term care rider at an additional cost. Furthermore, Medicare only covers long-term care expenses under very limited circumstances and only then for a very short period of time. This is why you might need to qualify for Medicaid – because Medicaid does cover long-term care costs.
The Problem with Qualifying – Will Your Assets Be at Risk?
Medicaid looks at both the income and the assets of an applicant when determining eligibility. If either your income or the value of your assets exceeds the limit you will be denied benefits. As a senior, your income will need to be below 100 percent of the Federal Poverty Rate. For 2016, 100 percent of the Federal Poverty rate for a family of two is $16,020 annually, or about $1,335 per month. If you are receiving SSI you automatically qualify for Medicaid. If your income exceeds the FPR you could still qualify if you are already paying nursing home costs or have significant medical costs. For most seniors, the bigger issue is the asset limit, which is set at $2,000 for an individual and $119,220 for a married couple. While certain assets are exempt, many seniors still have accumulated enough of a nest egg to have “countable resources” that exceed the limit. When that is the case, you will need to essentially rely on those resources to cover your long-term care costs until the value of those resources falls below the program limit. One other important aspect of Medicaid in Massachusetts is the five year “look-back” period that allows the program to review your finances for the five-year period prior to application and effectively discount assets transfers made during the time in question. Therefore, in most circumstances, transferring assets at the last minute isn’t an option.
How Medicaid Planning Can Help
Medicaid planning takes into account the likely need to qualify for benefits in the future as well as the obstacles you might encounter when trying to qualify. A well-drafted Medicaid plan might include establishing a Medicaid trust that will remove major assets from your estate, thereby reducing the value of your “countable resources.” You may still be able to benefit from the assets held in the trust; however, they will no longer be owned by you once transferred into the trust. The best way to find out how Medicaid planning can help you is to consult with your Massachusetts estate planning attorney.
Please download our free estate planning worksheet. If you have additional questions or concerns regarding Medicaid in Massachusetts, contact the experienced Massachusetts estate planning attorneys at DeBruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.