Elder Law Center

One Essex Street

Saugus, Massachusetts 01906

Telephone 781.233.4444   Fax 781.231.2222

Saugus Advertiser November 27, 2003

ELDERS HOMES AT RISK

 Last week I reported about the budgets passed by the House and Senate. They have since gone to the conference committee with unfavorable results for the seniors in Massachusetts. The conference committee adopted the House proposal, which allowed for a one-year delay for implementation of the expanded estate recovery. It would become effective on July 1, 2004. We are not out of the woods until the Governor deals with vetoes. He could veto the proposal which would mean that the expanded estate recovery would keep it’s July 1, 2003 effective date. EVERYONE should call the Governor’s office at (617) 725-4005 and say, “ Please do not veto Section 110 of the Supplemental Budget.”.

 On September 4, 2003 I reported about the passage of the Expanded Estate Recovery and how the Commonwealth may take the homes of elders even if they had previously taken legal steps to protect it. This law is being applied retroactively and without notice to those that it affects. It affects people who own property as joint tenants, tenants by the entirety, life estates, living trusts, tights of survivorship or by other arrangement. It is an open-ended law that will allow the Commonwealth to go against property that had been previously protected.

 To demonstrate lets say that Tom and Sue are married and in their 70’s. They get by on social security and their only asset is their house that they own jointly. Tom has a stroke and requires nursing home care. Eighteen months later Tom dies.  Sue applies for a loan to pay for the funeral expenses and to her surprise finds out that she owes the Commonwealth $90,000 for her husbands nursing home care. Prior to July 1, 2003 this would not have happened. Sue, as the surviving spouse would have ended up owning the house free and clear.  If Sue had seen an attorney experienced in Medicaid, the house could have been protected. The Commonwealth is punishing those who are unfortunate enough to require nursing home care and don’t seek professional advice.

 The only good news that we have received this year is the increase of the average daily nursing home cost that is effective for MassHealth applications filed on or after November 1, 2003 from $214 to $244.  You are probably wondering how an increase in nursing home cost can be good news, so here you go. The Medicaid rules say that you can’t give away all your assets and immediately expect the Commonwealth to pay for your nursing home care. Your disqualification period for receiving Medicaid benefits is based upon the amount that you give away with a maximum period of three years, or five years if you use a trust, also know as the look-back period.

 To determine the disqualification period for having made a gift you divide the gift by $244 and the result is the number of days you are disqualified from receiving benefits. Let’s say you give your child $100,000. Under the old rules you would have been disqualified from benefits for 467 days ($100,000/$214=467 days) but under the new rules it drops to 410 days. This change allows parents to make larger gifts to children to protect their assets from the costs of nursing home care.

 One more word about gifts. Many people are under the assumption that they can not give more than $10,000 per person, per year. First off, this number has been raised to $11,000 per person, per year. But this is an Estate Tax rule not a Medicaid rule. If your total assets are less than one million dollars you do not have to be concerned with this rule.

 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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