When applying to Medicaid in Massachusetts (MassHealth), applicants will be subject to a five year “look-back” period. What this means is that the MassHealth agency will require the applicant to submit detailed records of all assets held or transferred by the applicant or spouse during the five years prior to when the applicant is a nursing facility resident and has applied for MassHealth benefits. When a MassHealth applicant is seen to have made a transfer of assets during this five year period for less than fair market value, the MassHealth agency will apply a period of ineligibility for MassHelath benefits. A transfer for less than fair market value could be a gift, a transfer of assets to a trust or another transaction in which the applicant gave away resources without getting comparable value in return. Such a transaction is called a disqualifying transfer.
Where the MassHealth agency has determined that a disqualifying transfer has occurred, they will impose a period of ineligibility during which the applicant will not be eligible for MassHelath benefits and will have to pay the higher private pay rate for nursing facility services. The length of ineligibility, in months, is equal to the total value of the amount transferred divided by the average monthly costs to a private patient receiving nursing facility services in Massachsuetts.
Example: If an applicant had transferred $100,000 to their child for less than fair market value and the current average cost of nursing facility services was $9,000 per month, the period of ineligibility would be approximately eleven months (100,000 / 9,000 = 11.12).
It is important to note that for the period of ineligibility for MassHelath benefits does not begin as of the date of the transfer, but on the first day that the applicant is otherwise eligible for MassHealth benefits. This means that the applicant would have to already be in a nursing facility, and meet all of MassHealth’s other health and financial requirements. For this reason it is often beneficial to apply for MassHelath benefits, knowing that you will be denied based on a disqualifying transfer, in order to get the period of ineligibility running. Where an applicant makes multiple transfers during the look-back period, the MassHealth agency will add the value of all resources transferred during the look-back period and determine a single period of ineligibility, based on the above formula. While this can certainly be a concern for those in need of MassHealth benefits, this structure can also offer applicants some MassHealth planning opportunities.