Many individuals mistakenly believe that once they qualify for Medicaid, their assets are safe from future claims. Unfortunately, that belief is often far from accurate. The truth is that Medicaid can attempt to recover the cost of your care after your death. Therefore, including Medicaid planning in your estate plan is crucial if you want to protect your assets from being lost to long-term care costs. In Massachusetts, the Medicaid Estate Recovery Program (MERP) is the mechanism the state uses to seek repayment for benefits paid. To help you plan accordingly and protect your assets, the attorneys at Legacy Care Law Firm explain the Massachusetts Medicaid Estate Recovery Program.
The Role of Medicaid in Covering Long-Term Care Expenses
One of the most common reasons seniors turn to Medicaid is the escalating cost of long-term care. Nationwide, nursing home care costs average over $100,000 per year, and in Massachusetts, the average is even higher, exceeding $180,000 annually. These expenses are out of reach for many families, particularly when care is needed for multiple years. Since Medicare and private insurance plans generally do not cover extended nursing home stays, Medicaid is often the only practical source of financial support.
To qualify for Medicaid, applicants must meet strict income and asset thresholds. The eligibility process focuses on “countable” resources, which include most types of property and savings. If you exceed the limits, you must “spend down” your assets to qualify. Once you are approved, it is easy to believe your worries are over. But what many people do not realize is that Medicaid may attempt to recover what it paid on your behalf after your death.
How the Massachusetts Medicaid Estate Recovery Program Works
The Massachusetts version of MERP allows the state to recoup the funds it has paid for a recipient’s long-term care, typically from that individual’s probate estate. This means that if you received Medicaid benefits to pay for nursing home care, for example, the state could file a claim against your estate after your death to recover those funds.
Unlike some states that practice “expanded recovery,” which allows for reimbursement from non-probate assets such as jointly held property or assets in a revocable living trust, Massachusetts limits recovery to probate assets. These are assets that pass through the probate process and are distributed according to a Will or, if no Will exists, under the state’s intestacy laws.
When MERP Is Not Permitted
Although MERP gives the state authority to pursue reimbursement, there are exceptions that may protect your estate under certain circumstances. These exceptions are intended to prevent situations in which vulnerable individuals could be displaced or left destitute due to Medicaid recovery. Massachusetts does not allow Medicaid estate recovery when:
- The deceased recipient has a surviving spouse.
- There is a surviving child who is either under 21 or who has a disability or is blind.
- A qualifying relative lives in the deceased recipient’s home, such as:
- A sibling who resided in the home for at least one year before the recipient entered a long-term care facility and who has a legal interest in the property.
- An adult child who lived in the home for at least two years before the parent entered long-term care and whose support helped delay that transition.
Understanding Hardship Waivers in Massachusetts
In certain situations, the Commonwealth may grant a waiver or reduction of estate recovery if pursuing it would create an undue hardship for the heirs. Massachusetts offers three different types of hardship waivers, including:
- Residence and Financial Hardship Waiver: If any heir of an estate qualifies for this waiver, the entire MassHealth claim is waived, and the estate is not eligible for the Care Provided or Income-Based waivers.
- Care Provided Waiver: An heir of an estate may qualify for this waiver if the estate does not qualify for a Residence and Financial Hardship waiver. If any heir of an estate qualifies for this waiver, the entire MassHealth claim is waived, and the estate is not eligible for the Income-Based waiver.
- Income-Based Waiver: An heir may qualify for this waiver if the estate does not qualify for the Residence and Financial Hardship waiver, or the Care Provided waiver
To request a hardship waiver, the estate representative or affected beneficiary must file a written request within 30 days of receiving the notice of the state’s intent to recover from the estate. Each case is reviewed individually, and the decision to grant a waiver lies with the Massachusetts Medicaid agency.
Real Property Liens as a Recovery Tool
One method used by the Commonwealth to recover funds is through the placement of liens on real property owned by a Medicaid recipient. These are typically referred to as post-death liens. If the deceased owned a home or other real estate that is subject to probate, the state may place a lien on that property. The lien stays in place until the Medicaid debt is satisfied, or until the estate successfully asserts an exemption or hardship waiver.
In some cases, recovery can be deferred if the person inheriting the property lived there prior to the recipient’s death and lacks the financial means to repay the claim without selling the home. Massachusetts may agree to delay collection or accept a repayment plan that is fair and feasible for the heir.
Protecting Your Estate from MERP in Massachusetts
The best way to protect your assets from Medicaid estate recovery is to incorporate Medicaid planning strategies into your broader estate plan. Because the rules are both strict and complicated, early and careful planning is vital. An experienced Medicaid planning attorney in Massachusetts can help you develop a strategy that reflects your specific circumstances and long-term goals. Some commonly used tools and strategies include:
- Establishing an Irrevocable Trust: Assets placed in an irrevocable trust are not considered countable resources for Medicaid eligibility, provided they were transferred into the trust at least five years before you apply for benefits. These assets are also typically shielded from estate recovery, as they no longer belong to the Medicaid recipient.
- Making Exempt Transfers: Certain transfers, such as to a spouse or a child with a disability, are permitted under Medicaid rules and do not trigger penalties or recovery actions.
- Spending Down Assets Wisely: Strategic use of your resources, such as paying off debts, improving exempt property, or purchasing funeral arrangements, can help reduce countable assets while preserving value for your heirs.
- Prepaying for Burial and Funeral Costs: Massachusetts allows individuals to set aside money for burial in a Medicaid-compliant way, and these funds are not subject to recovery.
- Reviewing and Updating Ownership Structures: How you title your property can affect whether it will be subject to probate and, consequently, to Medicaid estate recovery. Property that passes outside of probate may avoid recovery if it is structured properly in advance.
The Medicaid Estate Recovery Program in Massachusetts can create significant challenges for families who are unprepared, and many people spend a lifetime building wealth, only to see it diminished or lost entirely to long-term care costs and state recovery efforts. While some estate recovery may be unavoidable, a well-crafted estate plan can reduce the risk and protect your loved ones from financial hardship; however, the most effective time to plan for Medicaid eligibility and estate protection is long before you actually need long-term care.
Do You Have Additional Questions about the Massachusetts Medicaid Estate Recovery Program?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about the Massachusetts Medicaid Estate Recovery Program, contact our Medicaid planning attorneys in our North Andover, Woburn, and Beverly offices at (978) 969-0331. Our Salem and Nashua, New Hampshire office can be reached at (603) 894-4141.
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