MassHealth has proposed massive changes to its regulations governing long-term care, both in the community and in nursing homes. Many of these are complicated, but could adversely affect many seniors in the state. One that’s not so complicated is a proposal to limit transfers to pooled disability trusts.
Transferring assets into trusts
Federal and Massachusetts laws permit individuals with disabilities to transfer assets into so-called (d)(4)(A) and (d)(4)(C) trusts, which permit assets to be protected and used solely for the benefit of the individual receiving Supplemental Security Income or MassHealth benefits. The funds in these trusts are not counted against the usual asset limits for eligibility. The main proviso for these trusts is that if funds remain at the beneficiary’s death, they must reimburse the state for MassHealth expenditures made on the beneficiary’s behalf.
The main difference between (d)(4)(A) and (d)(4)(C) trusts is that the former are individual trusts for single beneficiaries and the latter are pooled trusts managed by non-profit organizations for any number of beneficiaries. But there’s another significant difference. Beneficiaries of (d)(4)(A) trusts must be under age 65 when they are created and funded, which bars most people receiving long-term care from using them. This is not the case with (d)(4)(C) trusts; they can be funded at any age, or at least that was the case under current regulations—until 2017.
Massachusetts is currently one of 20 states and the District of Columbia that permit post-65 funding of (d)(4)(C) trusts. The proposed MassHealth regulations would bar post-65 funding by imposing a transfer penalty. Here are some of the reasons these trusts are vital to the welfare of Massachusetts seniors:
- They permit payment for extra services for nursing home residents, whether they are health aides, special medical care, entertainment, or simply a special meal.
- They can pay for geriatric care management to make sure the resident gets appropriate and necessary care.
- While nursing home residents are permitted to keep their homes, they are not permitted to keep funds to pay for maintenance. They can use funds in a (d)(4)(C) trust for this purpose.
- For seniors receiving care at home, MassHealth usually does not pay for all that they need. Funds in (d)(4)(C) trusts can be used to pay for additional care, helping to keep beneficiaries at home rather than having to move to nursing homes at greater cost to the state.
The cost of (d)(4)(C) trusts to MassHealth is not great, since any funds remaining at the beneficiary’s death (after a small holdback for trust administration) goes to MassHealth to repay it for its expenses. In short, permitting post-65 transfers to (d)(4)(C) trusts is a great benefit to Massachusetts seniors at little cost to the state. They have been working well and there’s no need for a change.
If you agree, please call your state legislators. While this proposed change is not legislative, intervention by legislators should influence MassHealth in terms of whether it goes forward with its plan. Find your state legislators here.
Also, click here to read The Boston Globe‘s article on the same topic and especially the readers’ comments—the legislature may be wary of voter backlash against this change.
EDITOR’S NOTE: While this article was written in 2017, the situation has changed very little since then. MassHealth is still threatening to penalize the funding of (d)(4)(C) trusts by people over age 65, but so far has not done so. As of this writing, it is holding off due to the Covid-19 pandemic.