Contemplating nursing home care for oneself or a loved one, along with its financial obligations, is stressful to say the least.
The reality is, with average monthly costs of $7,120 a month in the state of Massachusetts, your concerns are more than worthwhile.
While residents can take comfort in the state’s Medicaid (or ‘MassHealth’ in Massachusetts) plan, which aims to cover nursing home costs for people in need, the MassHealth Estate Recovery program remains a notable concern for homeowners.
There are various factors to consider when it comes to nursing home expenses and the protection of your property, and this article can be a playbook to help inform and outline your strategy going forward.
Can a Nursing Home Take Your House in Massachusetts?
In short, yes.
Through the MassHealth Estate Recovery Program, a nursing home can place a lien on your property. This lien would entitle MassHealth to a claim on the proceeds if the property is sold.
Families will benefit from a thorough understanding of the program, in order to make good estate planning decisions that protect your assets from future recovery efforts.
The MassHealth Estate Recovery program must comply with specific legal provisions and justifications, which we will break down in more detail below.
How & When Can a Nursing Home Take Your House?
MassHealth are required by federal and state Medicaid law to recover the total cost of members’ medical expenses (including nursing home care) paid for by MassHealth.
The MassHealth Estate Recovery program is aimed at reimbursing the state for the cost of the care, by recovering the funds via the remaining assets in the member’s probate estate.
If you are a MassHealth member and receive nursing home care for 6 months or longer, and if you pass away while being the legal owner of your house, your house could very well fall victim to estate recovery.
MassHealth will file a claim against your probate estate to recover the total cost of care, therefore becoming a creditor of your estate. When your estate is administered, if there is insufficient cash left in the estate to pay off debts, creditors’ claims are settled by the sale of remaining assets.
Simply put, your house can be sold after your death, to settle your nursing home bill.
It is important to note that MassHealth Estate Recovery only affects members with a probate estate worth more than $25,000. There are also exceptions, deferrals and waivers to the process to keep in mind, listed below.
Exceptions
MassHealth will not pursue estate recovery if:
- Member’s probate estate is worth $25,000 or less.
- The member had certain long-term care insurance.
- The estate consists of protected resources belonging to American Indians or Alaska Natives.
Deferral
MassHealth will delay pursuing estate recovery:
- There is a surviving spouse residing in the property.
- A surviving child under the age of 21 residing in the property.
- A child of any age residing in the property who is blind or permanently and totally disabled.
Hardship Waivers
MassHealth will waive all (or a portion) of its estate recovery efforts if an heir to the estate qualifies for any of the following undue hardship waivers:
- The heir’s income was 133% below the federal poverty level for two years while residing in the property.
- The heir provided care to the member for two years while residing in the property.
- The heir’s income was 400% below the federal poverty level for two years, generally.
| MassHealth Estate Recovery Key Factors |
|---|
| Estate Recovery only commences after the death of a MassHealth member. |
| Member must have been 55 or older or receiving long-term care in a nursing home for at least 6 months. |
| Member must have left a probate estate with more than $25,000 in assets that they owned before passing. |
| The house in question must have been part of the member’s probate estate. |
How do I protect my assets from a nursing home in Massachusetts?
Purchase Long-term Care Insurance
Long-term care insurance is a valuable safety net that ensures nursing home expenses are covered, warding off any future claims against your probate estate.
Additionally, MassHealth Estate Recovery is excluded if a member’s long-term care insurance policy meets specific requirements in terms of the Massachusetts General Laws. The policy must:
- Cover long-term care for at least two years
- Contain a daily benefit dollar amount of $125
- Include an elimination period of less than 365 days in a nursing facility
Investing in the right long-term care insurance could protect your home from a MassHealth lien!
Consider an Irrevocable Asset Trust
Transferring ownership of your assets, including your house, into an irrevocable trust can be a smart way to protect them from nursing home claims.
Consult an estate planning or elder law attorney, and have your assets placed into an irrevocable trust. You will name an independent trustee, who becomes the owner over all assets in the trust. This arrangement allows you continued use of your home or assets, whilst simultaneously safeguarding them from nursing home claims.
Individuals considering this option MUST keep in mind the MassHealth 5-year Look Back Policy, where asset transfers made within 5 years of applying for Medicaid can affect your eligibility. Estate planning should take place as early as possible, preferably more than 5 years before a person might need long-term nursing home care.
An irrevocable trust is a legally binding agreement that cannot be amended or canceled once created.
Consider a Life Estate
A life estate is a legal arrangement where you transfer ownership of your property to someone else, on condition that you can continue using it for the rest of your life.
Due to the home no longer belonging to you, no nursing home liens can be placed on it.
This handy option gives you peace of mind knowing what will happen to your home after your death, as well as security and stability for the remainder of your life.
As with an irrevocable trust above, the MassHealth 5-year Look Back Policy applies to transfers of property through a life estate. Consult an estate planning or elder law attorney for professional help in setting up a life estate.
Gifting of Assets to Your Next of Kin
Gifting high value assets to family members is a simple and practical step one can take to ensure their assets are protected from nursing home claims, and most importantly remain in the possession of your loved ones after your death.
Individuals giving and receiving gifts must of course keep in mind tax implications, as Massachusetts imposes its own state estate tax, which can be impacted by lifetime taxable gifts (such as immovable property).
Scaling down your personal assets can be a surefire way to avoid nursing home claims.
What to do if I already owe nursing home fees in Massachusetts
If you or a loved one are already receiving long-term care, and are concerned a property may be threatened by future nursing home claims, we have one more Hail Mary to throw your way.
Sell your house to us!
Selling your inherited home to a cash home buyer in MA is an option that promises to get you the cash-in-hand you need to secure your estate, and manage your nursing home fees.
Cash home-buying companies specialize in quick, hassle-free property sales and have no issues purchasing properties as-is. Cash home buyers also eliminate commission/agent fees and closing costs – as well as the tiresome effort of putting your house ‘on show’.
Frequently Asked Questions
Can a Declaration of Homestead Protect My House From a Nursing Home Claim?
No. MassHealth liens brought by the Massachusetts Department of Transitional Assistance are exempt from the homestead protection.
However, whilst the member or their spouse are alive, the State will not seek reimbursement for MassHealth claims from the homestead property.
Can a nursing home put a lien on your house?
Yes. A nursing home can place a lien on your property Through the MassHealth Estate Recovery Program.
This lien would entitle MassHealth to a claim on the proceeds if the property is sold.
What are the requirements for MassHealth eligibility in 2024?
For Regular Medicaid, an individual must not have an income in excess of $1,255 a month, with an asset limit of $2,000 (excluding the individual’s home).
For Frail Elder Waiver, an individual must not have an income in excess of $2,829 a month, with an asset limit of $2,000 (excluding the individual’s home).
Comprehensive info available here.
Conclusion
Understanding how nursing home claims can potentially affect your estate in Massachusetts is a financial consideration that should not be taken lightly.
Early planning, consultation with professionals and decisive decision making can safeguard your home and ensure your long-term care needs are met without drastic consequences.
We hope this guide answers your questions and goes some way to ensuring a nursing home cannot, and will never take your house in Massachusetts!
Keen to free up funds for your long-term care plans? Contact the best in the business.
