What Potential Changes to MassHealth Mean for Your Finances

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There are potential changes coming to the MassHealth regulations that will not only affect seniors’ ability to become eligible for long-term care benefits but also eliminate a commonly used strategy to pay for services that are not otherwise covered by MassHealth. It is important to know what is currently allowed and what may change if you or a loved one has a pooled charitable trust or are looking at how best to manage these assets in the future.

Current MassHealth regulations permit MassHealth members who are living in or are about to enter a nursing home to transfer assets to a “pooled charitable trust” without incurring a penalty for disposing of those assets. A pooled charitable trust is a trust administered by a non-profit organization that allows the senior to have a financial resource to pay for things that MassHealth does not cover, such as dentures, companionship, extra physical therapy, or clothes. If there is any money remaining in the trust at the senior’s death, the first twenty percent goes to the non-profit organization, and the remaining funds are used to reimburse MassHealth up to the amount it paid on the senior’s behalf. If, after payment of those expenses, there is any money left, it can be paid to the senior’s beneficiaries as he or she specifies in his or her will.

MassHealth is weighing changes to its rules that would require seniors to expend their assets, including assets held in pooled charitable trusts, before qualifying for MassHealth benefits. The stated reasons for these changes are to align the Commonwealth’s rules with the 2008 federal Medicaid guidelines, and to reduce the strain on the $15 billion MassHealth budget. However, in making these proposed changes, MassHealth regulators are failing to address how the current seniors who have contributed funds to a pooled trust will be impacted. The average amount of a senior’s trust is around $60,000. Having practiced in the area of elder law for over ten years, I know that funding a pooled trust is a strategic decision that is only a part of a senior’s overall long-term care plan. Had the newly proposed rules been implemented in 2008 when the federal Centers for Medicare and Medicaid Services first expressed concern with pooled charitable trusts, many seniors would have chosen strategies to qualify for MassHealth benefits other than transferring their funds to a pooled charitable trust.

The proposed changes are short-sighted and do not reflect a long-term solution for how best to tackle the increasing cost of MassHealth benefits. The long-term effect of such a change in the pooled trust regulations means that seniors will choose to transfer excess assets earlier, outside of the five year look-back period on transfers, causing seniors potentially to qualify earlier for MassHealth benefits and thus, cost the Commonwealth more. In addition, MassHealth will be eliminating any possibility of being reimbursed for their expenses upon the death of the senior from unspent assets held by pooled charitable trusts. In addition, as Pamela Tames, executive director of The Plan of Massachusetts and Rhode Island, Inc. (a non-profit that administers a pooled trust) has stated, “This is not a shelter for the affluent. It is not a luxury. This is recognition that our public benefits don’t meet the needs of our disabled elders.”

A hearing on the proposed changes to the MassHealth regulations was held in December 2016 and MassHealth is considering comments from the public before deciding. Please contact Sharon Torgerson, Assistant Secretary for Communications at the Executive Office of Health and Human Services to share your questions or concerns about this potential change. She can be reached by phone at (617) 573-1834 or email: Sharon.Torgerson@State.MA.US.

 

Mike Stankavish is a lawyer and owner of North Shore Elder Law and Estate Planning. He can be reached through www.nselep.com