Medicaid is the main payment source for those who are living in long-term care facilities across the country. In Massachusetts, Medicaid is called MassHealth. The eligibility rules for MassHealth coverage in long-term care facilities are complicated and often misunderstood. Here are the basics:
1. Countable Asset Limit. Residents living in MassHealth long-term care facilities are limited to $2,000 in “countable” assets. Most assets are counted against this limit, except for the home (in most instances), one automobile, a prepaid funeral plan, and personal belongings, such as clothing and furniture. The spouse of a long-term care facility resident is limited to about $157,920 in countable assets in 2025 (the number is adjusted annually to reflect inflation). So, together, a long-term care facility resident and their spouse can have approximately $160,000 in assets.
2. Transfer Penalty. Giving away assets to get under the above asset limits is penalized by a period of ineligibility for MassHealth if they occurred within five years of the application for benefits. Though the rules for calculating the period of ineligibility are complicated and can result in a shorter penalty period, the effect of most gifts is that they cause five years of ineligibility from the date of the gift. However, penalties may be “cured” by the return of the gift, which MassHealth treats as if the original gift had never happened.
3. Income. In most cases, a MassHealth long-term care facility resident must pay all their income to the facility, subtracting a $72.80 per month personal needs allowance and any amount paid toward health insurance. In some instances, they may be able to divert some of their income to a spouse who is living at home or to dependent children. The spouse of a long-term care facility resident does not have to contribute any of their own income to the care of the spouse who is living in the long-term care facility.
4. Estate Recovery. When a long-term care facility resident dies, the state has the right to recover from their probate estate whatever the state has paid for their care under MassHealth. In most cases, there’s no estate, since the decedent received coverage due to their poverty. The only significant asset that many beneficiaries have is their home. Though there are many ways (with careful planning) to protect the home from this claim, if those steps are not taken in advance, it is likely to be subject to MassHealth reimbursement.
5. Exceptions. Exceptions apply to just about every rule stated above. For instance, if the “healthy” spouse has high care expenses herself, she may be entitled to keep more than $157,920. There is no penalty for transfers to disabled children or into trusts for the exclusive benefit of anyone under age 65 and disabled. Estate recovery claims may be waived under stringent hardship rules.
Though these are the basic rules, they are clarified by hundreds of pages of regulations and, often, unwritten customs govern how MassHealth reacts to specific situations. It’s these complications (in part) that keep elder law attorneys in business. You can learn more about these basic MassHealth rules by downloading our legal guide on The Basic Rules of Nursing Home MassHealth Eligibility.