What is MassHealth?

MassHealth is a government welfare program to pay certain medical costs of poor individuals. A large portion of the funds that pay for this state-run program comes from the federal government. The federal government name for this program is Medicaid.

 Who needs MassHealth?

In addition to persons with a low income and limited assets, elderly persons in need of skilled nursing care at home or care in a nursing home may need MassHealth. MassHealth benefits can supplement an elderly person's income to make the necessary care possible.

Rules Relating to MassHealth eligibility for payment of nursing home costs

Exempt or Noncountable Assets

2024 Exempt Assets for MassHealth Eligibility: Married couples: For the spouse at home: residence if equity value less than $1,071,000, plus $154,140 of other assets; for the spouse entering the nursing home: $2,000. Single person: residence if equity value less than $1,071,000, plus $2,000, but the residence becomes subject to a MassHealth lien. Irrevocable prepaid funeral contracts or trusts; $1,500 burial bank account; permanent life insurance having a death benefit of less than $1,500; term life insurance; personal effects; and one automobile if needed for transportation are also exempt.

Personal Needs Allowance

2024 Personal needs allowance for nursing home resident receiving MassHealth benefits: $72.80 per month.

Spousal Income Allowance

2024 MassHealth income allowance for spouse at home: minimum is $2,465.00 and maximum is $3,853.50.

Look Back Period

2024 MassHealth eligibility “look back” period for transfers of assets: five years for all transfers. Transfers to spouses and to children considered disabled under the Social Security Act are exempt. For applicants under age 65 and considered disabled under the Social Security Act, transfer to special needs trust is an exception. Transfers of home to caretaker child or to sibling with equity interest are exceptions. Transfer to pooled income fund is an exception.

Annuities

Single premium deferred annuities (that have not been irrevocably annuitized) are countable assets.

For a married couple, if an annuity is owned by and irrevocably annuitized in the name of the spouse who is at home, then the spouse can keep the annuity income. According to MassHealth, the beneficiary of any remaining unpaid annuity payments on the spouse’s death must be MassHealth for benefits paid for either spouse after age 55 or at any age while institutionalized.

For a married couple, if an annuity is owned by and irrevocably annuitized in the name of the applicant for MassHealth before 2/8/06: (i) the annuity payments must be used to pay for the applicant’s care if not applied to the spouse’s minimum monthly maintenance needs allowance and the applicant’s personal needs allowance; and (ii) the beneficiary on the applicant’s death can be anyone.

For a married couple, if an annuity is owned by and irrevocably annuitized in the name of the applicant for MassHealth on or after 2/8/06: (i) the annuity payments must be used to pay for the applicant’s care if not applied to the spouse’s minimum monthly maintenance needs allowance and the applicant’s personal needs allowance; (ii) the primary beneficiary on the applicant’s death can be the applicant’s spouse; and (iii) the contingent beneficiary must be the Commonwealth of Massachusetts to the extent of MassHealth benefits paid for the applicant.

For single individuals, if an annuity is owned by and irrevocably annuitized prior to 2/8/06, then the payments must be used to pay for the applicant’s care except for any portion applied to the personal needs allowance and the beneficiary on the applicant’s death can be anyone.

For single individuals, if an annuity is owned by and irrevocably annuitized on or after 2/8/06, then the Commonwealth of Massachusetts must be the primary beneficiary of annuity to the extent of MassHealth benefits paid for that individual. The contingent beneficiary can be anyone.

There are other requirements that an annuity must meet under the MassHealth Regulations, such as that it must be irrevocable and non-assignable, cannot be cashed in, must have equal monthly payments, total payments to be made must equal or exceed the cost of purchasing the annuity, and the term of the annuity must not exceed the annuitant's life expectancy under life expectancy tables referenced in MassHealth Regulations.

MassHealth Liens and Estate Recovery

Liens can be placed on the home once MassHealth benefits are being paid for a nursing home resident, unless a spouse or permanently and totally disabled child are living in the home. The Division of Medical Assistance has the right to recover nursing home costs paid under the MassHealth program from probate assets only.

No lien will be placed on the principal residence of a person who purchases a long-term care insurance policy that covers two-years in a nursing home with a benefit of $125 per day. For long-term care insurance policies issued prior to March 15, 1999, the limits were $50 per day for two years of nursing home care, and $25 per day home care coverage was also required. These old policies have been “grand-fathered” by MassHealth and therefore still qualify for the lien exception. This lien exemption may be lost if the MassHealth application is not completed correctly.  If the applicant for MassHealth was not living in the residence at the time he or she enters a nursing home, this lien exception may not apply.

Home or Former Home held in an Irrevocable Trust

MassHealth Regulations provide that the home or former home of an applicant for MassHealth will be considered a countable asset if ownership is held in an irrevocable trust and if the terms of the trust make the home or former home available to the applicant. See discussion of irrevocable income only trusts under the topic Asset Protection.