MassHealth is the Massachusetts version of Medicaid, a joint federal-state program that provides health coverage for individuals who qualify. It is especially important for individuals with disabilities and those who need long-term care because, unlike other forms of health insurance, it covers nursing home care, home health care, and personal care attendants.
Unfortunately, the MassHealth eligibility rules are very complicated. Many of those complications have to do with the asset limit, which has remained at $2,000 for many forms of MassHealth since 1989 — 34 years. Massachusetts has done an admirable job of eliminating the asset limit for many forms of MassHealth for those under age 65 who are not seeking coverage of nursing home care. But it remains in place for anyone over 65 and anyone who needs nursing home care at any age. (Spouses of nursing home residents are limited to approximately $150,000 in “countable” assets, which includes just about everything except the family home.)
MassHealth also applies income limitations, which also can be tricky, especially because they are different for different types of MassHealth coverage. In the case of nursing home coverage, the income limits don’t apply because the nursing home resident must, in most instances, pay their income to the nursing home to help cover their cost of care. (They may keep a small personal needs allowance of $72.80 a month, which also has remained unchanged for decades.)
Since MassHealth limits the amount of assets beneficiary may have, it also penalizes transfers of those assets by imposing a period ineligibility for benefits of up to five years following any transfer. This makes sense — if there’s an asset limit, it wouldn’t make sense to permit people to avoid it simply by giving their assets to someone else. But it can cause problems when people transfer assets and then need care during the subsequent five years. Often nursing homes are left high and dry because the patient no longer has money to pay them and cannot qualify for MassHealth.
California is leading the way in eliminating the asset limit for all forms of Medi-Cal, its Medicaid program. As of July 1, 2022, it increased the asset limit from $2,000 to $130,000. As of January 1, 2024, it will eliminate its asset limit entirely. On July 14th of this year, the Centers for Medicare & Medicaid Services (CMS) approved California’s change.
This will have several beneficial effects, including:
- Allowing many more people to become eligible for health care coverage.
- Simplifying the application process. Applicants will no longer need to provide records of their assets to obtain coverage. This will make it easier for them and for the eligibility workers who will no longer need to review the documentation and determine whether it is accurate.
- Avoid traps for the unwary or uninformed. Many people lose coverage because they discover they have an account that pushes them over the $2,000 limit or because they receive funds that put them over the limit. This can be from an inheritance, a personal injury award, a gift or from employment. The severe $2,000 limit has always been difficult to maintain and loss of coverage can subject beneficiaries and their families to bureaucratic complications that can last months, often leaving health care providers unpaid.
- Eliminating the incentive to transfer assets. Since assets will no longer be a factor in receiving benefits, individuals will no longer feel pressured to transfer them to others to preserve them for their own future needs or to make sure they can pass on something to their families. Even with the best planning, asset transfers can result in a loss of security and autonomy.
- Less need for elder law attorneys. Since a large part of what elder law attorneys do involves helping seniors, individuals with disabilities, and their families navigate the complicated world of Medicaid eligibility, to the rules and process are simplified, the less need clients will have for legal counsel and representation.
There has been talk of “Medicare for all,” making Medicare the health insurance for all Americans. California’s initiative will, in effect, provide Medicaid for all. Those who will be disqualified due to their income are more likely to have private health insurance or be able to buy a subsidized Marketplace plan.
Massachusetts Moving in Opposite Direction
For all the reasons stated above, Massachusetts should follow California’s example. The reality, however, that in at least one way it is going in the opposite direction.
Under both federal and Massachusetts law, individuals with disabilities under age 65 may transfer assets to a (d)(4)(A) or (d)(4)(C) trust without a transfer penalty being imposed. (The names of the trusts refer to the authorizing statute — (d)(4)(A) trusts are individual special needs trusts and (d)(4)(C) trusts are pooled trusts run by nonprofit organizations.) After the transfer, the funds in these trusts (which have strict limitations) will not be counted against the $2,000 asset limit.
Currently, individuals over age 65 may transfer assets to a (d)(4)(C) trust but not a (d)(4)(A) trust. One of Charlie Baker’s last acts as governor was to issue a regulation barring transfers by individuals over age 65 to (d)(4)(C) trust. As of now, this restriction will go into effect on March 1, 2024, though there are pending legislative proposals to eliminate the restriction.
As a result, at almost the same time that California will be making life easier for its seniors and other low-income residents by eliminating its Medicaid asset limit, Massachusetts will be making more difficult by barring the use of (d)(4)(C) trusts by seniors to shelter assets. Often the funds they set aside in such trusts are crucial in allowing them to stay at home by paying home health aides through a combination of MassHealth benefits and funds from their (d)(4)(C) trust accounts. If they are in nursing homes, the (d)(4)(C) trusts can be used to pay for extra items and services in the facility. (Remember, MassHealth has not increased the $72.80 personal needs allowance in decades.)