Elder Law Center

One Essex Street

Saugus, Massachusetts 01906

Telephone 781.233.4444   Fax 781.231.2222

Saugus Advertiser January 1, 2004

This Holiday Season Romney is the “Grinch”

For many Massachusetts elders, the joy of the holiday season will be tempered this year by financial uncertainties.  Since the passage of the FY04 Budget in July, changes in estate recovery and gift-giving rules for nursing home residents on MassHealth and their spouses have raised complex questions about what claims the state can make against their homes and what gifts elders can make without incurring a penalty. 

“Giving Christmas gifts to your family this year may be a risky proposition,” stated Susan Levin, an estate planning attorney in Newton.  “Medicaid has applied for a waiver of federal Medicaid rules so that they can assess stronger penalties against gifts or asset transfers for less than market value.  I would caution anyone who may need MassHealth nursing home care to proceed cautiously when giving holiday gifts to family members.”

Another problem for gift-giving this year arises from the passage of a second Romney proposal expanding the state’s authority to recoup MassHealth costs from the property of deceased MassHealth recipients.  Although the new law went into effect in July, the state has yet to issue rules on what heirs of the decedent may or may not do with assets subject to claim under the new law.

“The new estate recovery law requires heirs to property of an elderly MassHealth recipient to disclose all property in which the deceased had an interest prior to death,” explained Carol Klyman, a Springfield attorney.  “If they make gifts of this property, such as giving a favorite necklace to a daughter, they may be liable to the state for the cost of the gift.  Because the state has not yet issued clear rules or notified heirs of this new expanded recovery, giving a gift may come back to bite them.”

Prior to July, when a Medicaid recipient died, the state could only claim against the decedent's probate assets to recover payments for nursing home care and other benefits.  Probate assets are those possessions which pass to an heir via a will.  The new law allows the state to make a claim for repayment against any asset owned by the Medicaid recipient immediately before death, including homes in joint names, personal property and other belongings.  The controversial law has generated hundreds of phone calls and letters to legislators from residents who were concerned that they would lose the family home if they became ill and needed nursing home care. 

The Division of Medical Assistance informed attorneys representing executors and surviving spouses in early November that in light of the legislative debate it would allow real estate sales to proceed without the need for a surviving spouse or other heirs to obtain a release of claim from the state.  The Division also advised attorneys that it supported repeal of recovery against insurance proceeds, and thus would not pursue policy beneficiaries for repayment.  Although the Legislature passed legislation delaying the implementation of expanded estate recovery in November, it was vetoed by the Governor.  The Governor also vetoed legislation which exempted life insurance proceeds from expanded estate recovery.

“I literally don’t know what to tell clients who have been waiting since last summer to know what the rules are about Medicaid estate recovery and gift giving,” said Klyman.  “It is unfair and cruel to leave bereaved spouses and children in limbo at a time when we all want to celebrate the holidays and remember those we love with presents.  I think the Governor is being a Grinch when it comes to elders.”

Just so that I don’t end on such a negative note, I’d like to give you an update from Beacon Hill. Although most activity at the State House has ceased for the holidays, legislators will be back in full force in January. The following are a few things that are encouraging:

The House has admitted Senator Frederick E. Berry’s late-filed bill, which would grandfather all estate planning in existence prior to July 1, 2003. The bill number is S.2173 and it was referred to the Judiciary Committee. This is a promising sign as leadership has refused to admit other bills addressing expanded estate recovery.  This is a very important bill that would protect the hundreds of thousands of people who had created life estates on their homes. A life estate is a transfer of your home in which you retain the right to live in it for the rest of your life. This had been a standard planning practice that protected the senior’s right to occupy their home and allowed it to pass to their children upon their death and protected it from nursing home costs. Since the expanded estate recovery law was unfairly applied retroactively, it adversely affected many people. We are recommending to people with life estates to wait and see what the legislature does in January to right this wrong. If the legislature does nothing, anyone with a life estate should seek guidance to see if there is anything else they can do to protect their homes.

Senator Robert S.Creedon, Jr. continues to fight for your rights. He continues to fight against both expanded estate recovery and the transfer of assets waiver proposal and has strongly indicated that he would fight for repeal of both provisions in the upcoming year. All of our legislators should be backing him.

There continues to be behind the scene negotiations to support an override of the Governor’s (AKA the “Grinch”) veto of the delay in implementing the expanded estate recovery. Without being too specific, I can say that things are looking promising.

I wish all of you a happy and prosperous New Year and encourage you to call your legislators and ask that they support Senators Berry and Creedon in their fight against the Grinch.

This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).

Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Ma. He also holds a masters in accounting and a masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys.

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