Special Supplement To The MGH COMMUNITY NEWS October 2001
MASSHEALTH OVER 65 AND LONG-TERM CARE
On October 2nd, the Community Resource Center hosted a talk by Michelle Staples and Scott Mandell, MassHealth (Massachusetts' Medicaid program) outreach workers, on
MassHealth "Over 65" and Long-Term Care.
Michelle Staples is the MassHealth outreach worker assigned to the MGH. Her regular business days here are Tuesdays and Wednesdays. She welcomes MassHealth-related calls
at x6-3326. She opened the presentation by discussing what are sometimes called "traditional" MassHealth cases, cases in which an individual who lives in the community
(i.e., not in a long-term care facility) who is over the age of 65 applies for MassHealth. These are referred to as "traditional" cases because the eligibility rules are
relatively unchanged whereas eligibility for the "Under 65" population was overhauled as part of the state's healthcare reform in 1997. Prior to this time financial eligibility
was based on an applicant's income AND assets. Healthcare reform removed the assets of the Under 65 population from consideration. For that population, now only income is
considered. But for those over 65 both income and assets are still factors. Note, however, that those who are over 65 and have a minor/dependent child or are a "caretaker
relative" to a child (e.g., grandparents raising grandchildren), that they would fall under the rules for the under 65 population by virtue of their relationship to the child.
MASSHEALTH OVER 65 (COMMUNITY CASES)
Over 65 Community INCOME Rules
SPECIAL PROGRAMS
Medicare Buy-In Programs
MASSHEALTH LONG-TERM CARE
Long-Term Care ASSETS Rules
The biggest concern most people who are going into a nursing facility have is about whether or not they have to sell their home. What follows is an explanation of rights to transfer a home that was the primary
residence for the applicant. Applicants are allowed to transfer title of the home (single- or multi-family) to specific people: a spouse, a minor child, a disabled adult child, or a "caretaker child" (one who
has provided care that allowed the applicant to remain in the community, who has lived in the home for at least 2 years), or a sibling who has equity interest in the house who has also lived in it for at least
1 year prior to date of applicant's admission to nursing home. From the time of application the applicant has 90 days to make such allowable transfers of the property into someone else's name. If none of these
situations apply then, if it is a single family home, the applicant has to sell the it. Once he/she has declared intent to sell the home at fair market value the asset is exempt from consideration in the asset
base for 9 months (with the possibility of an extension if after 9 months they are still actively trying to sell).
When none of the above situations that allow for transfer of title apply, Multiple family homes are treated somewhat differently; they are viewed like a business. Unlike single-family homes, the multi-family dwelling
does not have to be sold if it is income generating. This is defined as income in excess of expenses and capital expenditures. In this case MassHealth would not require it be sold, but would put a lien on it to be
exercised at the time of the applicant's death. This income would become part of the "patient paid amount"- what the patient pays the nursing facility, and therefore lowers the MassHealth portion of the bill. Advocacy
tip: MassHealth doesn't set a threshold for how much income the property must generate. Some families who have been providing free or low rent to relatives/friends have figured the expenses and capital expenditures
and set rents just above that amount, as little as $1/month, and this has kept the house from being sold and these tenants from being evicted.
Vehicles - Similar rules apply as when applying for community care- it there is a community spouse or other household member then the first vehicle is noncountable, and the equity value of additional vehicles are countable.
For an unmarried institutionalized individual, one vehicle is noncountable if it is used to access medical treatment of a specific or regular medial problem, or it is modified for operation by, or transportation of, a
handicapped person, or its equity value does not exceed $4,500. In this last case, if the equity value exceeds $4,500 (and neither of the other exemptions apply) then the value in excess of $4,500 is counted towards the
individual's asset limit.
Assets of SSI recipients are not counted.
Businesses - the income generated by the business is counted as income, but the business is not considered an asset, so it is not required to be sold. The income would be figured into the calculation for the patient paid amount.
In other words, MassHealth has an interest in not disrupting cash flows to applicants that will help them pay a share of the nursing home cost (see "Multiple family homes" above).
Spending Assets
Transfers of Assets and Protecting Assets
Trusts - whether or not they are countable as assets depend on specifics about how they are written. In this area patients should be referred to a lawyer. Simplistically, all trusts have a look-back period of 5 years. Revocable are considered
available assets. Irrevocable trusts, depending on the specific legal language used to set them up, may be deemed available or unavailable. Generally if one is expecting an imminent admission to a nursing facility it is too late to set up a trust.
Annuities - Annuities, however, are an option for those who have little time to protect some assets and where there is a spouse in the community. Annuities are generally offered through an insurance company and operate sort of like a reverse
life-insurance policy. The applicant turns over assets in return for a source of income. The insurance company consults an actuarial table to determine the applicant's life expectancy and then divides up the asset into standard amounts that it pays
back to the applicant on a yearly basis. To meet MassHealth requirements an annuity must be fully annualized (the same amount is paid throughout the life of policy), must deplete the entire asset and the beneficiary must be the applicant or spouse.
If the applicant dies before the asset is depleted the beneficiary/spouse gets what is left (after whatever fees the insurance company takes)- not MassHealth. If the applicant dies beyond the actuarially determined life-expectancy, the applicant
continues to receive an income, but the beneficiary does not benefit. Again allowing this is in the best interest of MassHealth because the excess income becomes part of the "patient paid amount"- what the patient pays the nursing facility, and therefore
lowers MassHealth expenses. MassHealth especially benefits if the patient outlives the original asset.
Long-Term Care INCOME Rules
If the applicant is married, there are protections for the "Community Spouse".
Long-Term Care INCOME AND ASSET PROTECTIONS FOR THE COMMUNITY SPOUSE
GUARDIANSHIP FEES
-The CRC thanks Michelle Staples and Scott Mandell for sharing their expertise and for their help in editing this special supplement. Again, Michelle welcomes MassHealth-related calls at x6-3326, or social service staff can direct questions to the Community Resource Center, Ellen Forman x6-5807.
PART I
Over 65 (Community cases) ASSETS Rules
The asset limit for an individual is $2,000 and for a couple is $3,000. Examples of countable assets include the contents of bank accounts, IRA's, Keough plans, pensions, and
annuities, the Personal Needs Account of a patient in a nursing home, real estate other than the principle place of residence, and revocable trusts. The first vehicle, regardless
of value is non-countable, but the equity value of all other vehicles is a countable asset. The cash surrender value of life insurance policies is usually counted, with the
exception of certain policies for those who are also SSI recipients. For the general Over 65 population, an individual can have a life insurance plan with a total Face Value of
$1,500 or less and it will be considered not countable. Also retroactive SSI and Retirement/Survivors/Disability Insurance payments are not countable in the month of receipt and
for the following six months if they are placed in a separate and identifiable account. Non-countable assets include all assets for those who receive SSI. For others, non-countable
assets include the home (if it is located in Massachusetts and used as a principal place of residence), one vehicle per family (regardless of value), assets of a household member who
receives EAEDC or SSI, personal belongings, irrevocable trusts, prepaid irrevocable burial contracts, burial space and funds for burial (either $1500 maximum set aside in a separate
account for burial, that is never used for any other purpose, or $1500 maximum Face Value of life insurance set aside for burial). One vehicle is non-countable. If the applicant has
joint bank accounts, all of the money is considered available to the applicant and therefore countable, unless she/he can prove that it is not their money or that partial ownership
can be verified. Other joint property is presumed to be owned in equal shares and counted proportionally, unless verified otherwise.
The income cut-off for this population is 100% of Federal Poverty Level. For 2001 this is $8,592 for an individual or $11,616 for a couple. If the applicant's income exceeds this amount
then he or she must meet a deductible- formerly called a "spenddown". This means one must demonstrate medical expenses in excess of a given amount in a six month period to meet MassHealth
income eligibility standards. The deductible amount is determined based on an individual's income. To estimate one's deductible first subtract a $20 disregard from the gross income. Then
refer to the FPL table distributed by MassHealth (see the department's website, staff access/CRC section), there is a column entitled "MassHealth Income Standards". Find the amount in this
column that corresponds to the appropriate family size and subtract it from the applicant's gross income. This "excess" amount is then multiplied by 6 to cover a 6 month period. Once
medical expenses are incurred over this amount the applicant can receive MassHealth for the remainder of the 6 month period. Deductibles recur every 6 months.
Allowable medical expenses to meet the deductible include: insurance premiums (can be prospective- i.e., bills due over the next 6 months), deductibles, and co-insurance, medical bills
(this includes chiropractic, dental, podiatry, vision care and medically prescribed transportation), and medical expenses such as hearing aids, eyeglasses, medications. These bills can have
been incurred at any time in the past as long as applicant can show a current bill saying amount is still due. Household expenses that are related to a medical condition may be used towards
the deductible as well, such as modifications to the home to make it handicapped accessible, or an air-conditioner prescribed by a doctor for a patient with asthma. All expenses used towards
the deductible must not be subject to further payment by another health insurance. Advocacy note: bills used to meet a deductible may be written off to Free Care, however, after they are used
to meet the MassHealth deductible.
The Home- and Community-Based Waiver
(Please also see MGH Community News, May 1998 on our website). The purpose of this program is to allow those who would qualify to be placed in a nursing home to remain at home while affording
the spouse similar protections from impoverishment as would be offered if they applied for MassHealth Long-Term Care (see next section for more detail). If the applicant is eligible the spouse's
income and assets are not counted. Eligibility requirements - applicant must be:
For those people with low-income who receive Medicare, but do not qualify for MassHealth Standard due to financial eligibility issues, there may be help. MassHealth administers programs that help
pay Medicare premiums, coinsurance and deductibles for people whose incomes fall within certain guidelines. Please see the accompanying chart for details.
PART II
Scott Mandell took over for the second part of the presentation to discuss Long-Term Care cases. He is the MassHealth outreach worker assigned to the Brigham.
Many of our patients who are facing many decisions related to nursing home care may have many misconceptions about applying for Medicaid/MassHealth. It is hoped that this information will help the social worker,
and/or patient and family to understand the complex eligibility requirements. Scott Mandell stressed though that all of what follows, as complex as it is, is a simplification. Individual situations vary.
Anyone with significant assets should be encouraged to consult an attorney who specializes in MassHealth law. One place to start a search is the National Academy of Elder Law Attorneys (520) 881-4005 or
http://www.naela.com.
There are allowable ways to spend assets prior to applying for MassHealth, one can buy personal needs items, pay off personal debt and pay medical expenses. However it is up to the discretion of the worker to decide if these payments
are reasonable. Some examples that Scott provided that are often allowed are clothes, TV, VCR to have in the facility again as long as "reasonable". Gifts to family may be allowed if the applicant can demonstrate it is a modest gift
that is part of a regular pattern of giving (rather than for the purpose of MassHealth eligibility).
Any significant transfers of money to are a red flag for MassHealth. They look back, generally, for three years (the exception is funds transferred from trusts- where the look-back period is 5 years). If significant funds were transferred,
then MassHealth imposes a "penalty". This penalty is determined by taking the amount transferred and dividing it by an amount that is supposed to reflect the average daily cost of a nursing home to result in a specific number of days.
MassHealth then will not pay for a nursing facility for that number of days from the day of transfer. The current amount used is $4,500/month. Therefore, even though the look-back period may be 3 years, that does not necessarily mean that
one has to wait three years before applying for MassHealth. One just has to either not enter an nursing facility until the penalty/waiting period has expired, or have retained enough funds to pay privately until it expires. One strategy
that some financial planners suggest is sometimes called the "half a loaf" strategy. Upon entering a nursing facility, one gives away about half of their assets leaving enough to cover the penalty period that MassHealth won't pay. Whether
the amount is exactly one half depends upon the private-pay rate of the specific nursing facility and how close it is to $4,500. The family member then keeps about half, which is better than nothing, hence the name.
For a single adult, all income in excess of the monthly personal needs allowance ($60 standard, $65 for SSI recipients) that the nursing home resident is allowed to keep goes into the "Patient Paid Amount" that is due the nursing home. MassHealth pays
the difference between this amount and the nursing home's MassHealth rate.
Note: this only applies to those that are legally married. In the not too distant past MassHealth had no protections to prevent the impoverishment of the community spouse. But there are now protections in place that have been liberalized over the past
few years. MassHealth does not distinguish between assets held in jointly or individually; for married couples all assets are considered available to each spouse (though one can transfer title of the home- see above). The community spouse is entitled to
retain the first $87,000 in assets (in addition to the home). This figure is adjusted annually. The institutionalized spouse in addition gets to keep up to $2,000. The community spouse also can keep income from both sources up to the "Maximum Maintenance
Monthly Needs Allowance", which in 2001 is $2,175. Some people have had success with keeping additional assets by taking this to the appeal process. If, on appeal, the spouse can demonstrate high expenses such as medical bills or mortgage, etc. then,
depending on the discretion of the referee, she may be allowed to keep more assets as a way to generate income to meet her higher living expenses. If she wins this on appeal, there is currently no requirement that she use the money in this manner. The spouse
would be free at that point to use or dispose of the assets as she sees fit.
A relatively new program allows guardians to be paid out of the applicant's assets. The court establishes guardianship fees, and initial court costs as a one-time expense that can be amortized over the course of the year and paid to the guardian out of the
patient paid amount. Similarly, a one-time $500 maximum fee for the guardianship application process and maximum of $250 for the annual redetermination can be reimbursed.
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