Medicaid (also known as MassHealth) is an insurer of last resort. It is a needs-based program. It was not intended for the wealthy nor historically, for the middle class. There are a variety of Medicaid programs; too many to list here. They are generally income and/or asset based. Several programs, such as long term nursing home Medicaid, are also concerned with elders who have transferred assets within the prior five years.
Medicaid is unlike Medicare. Medicare is a strictly federal program and is generally an earned benefit. Medicaid is a joint federal/ state program and is not an earned benefit. In an effort to stem Medicaid costs the Federal government has authorized states to recoup expenditures it has made on behalf of certain enrollees, generally by those over 55 or those in long term care facilities. The agency does this by way of liens on real estate during the life of the applicant and via probate upon the death of an applicant.
A member of our community recently wrote a letter to the editor of a local paper com- plaining that the Commonwealth of Massachusetts via Medicaid Estate Recovery Unit recouped money from the estate of his recently deceased parent. His parent had been on Medicaid. The parent had died while owning an inheritance from his previously deceased relative. The writer thought this to be profoundly unfair but that is the nature of getting benefits under a needs-based system. The system is allowed to ask questions, seek documents and seek recompense. Medicaid was not meant for people with money or inheritances. It was intended for the indigent. There are ways to minimize exposure to Masshealth Estate Recovery but they can be quite complex. Buying a long term care policy can avoid a lien and/or estate recov- ery on your home. Transferring assets may be another option and/or titling assets so that they do not pass through probate. You need to be very careful in this area. Under- standing the rules of Medicaid and crafting asset protecting strategies is not something for the novice.
Author’s note: I will be writing in the next issue on the dramatic federal changes to IRA beneficiary distribution requirements post death of the owner under the Secure Act. For other articles written by Attorney Hooker please visit his website at Elderlawservice.com.