MassHealth (Medicaid) is the main payment source for nursing home care in Massachusetts (and nationally). The eligibility rules for MassHealth coverage in nursing homes are complicated and often misunderstood. Here are the basics:
1. Countable Asset Limit. Residents in MassHealth nursing homes 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 nursing home resident is limited to about $148,620 in countable assets (in 2023, the number is adjusted annually to reflect inflation). So, together a nursing home resident and their spouse can keep approximately $150,000.
2. Transfer Penalty. Gifts of property to get under the above asset limits are penalized by a period of ineligibility for MassHealth if they occurred within five years of the application for benefits. While 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 nursing home 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 nursing home resident does not have to contribute any of their own income to the nursing home spouse’s cost of care.
4. Estate Recovery. When a nursing home resident dies, the state has the right to recover from their probate estate whatever has been paid for their care under MassHealth. In most cases, there’s no estate, since the decedent only received coverage due to their poverty. The only significant asset that many beneficiaries have is their home. While 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 $150,000. 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.
While these are the basic rules, they are clarified by hundreds of pages of regulations and often unwritten custom governs how MassHealth reacts to specific situations. It’s these complications (in part) that keep elder law attorneys in business. You can learn more about them by downloading our legal guide on “The Basic Rules of Nursing Home MassHealth Eligibility” here.