By
Atty. Brandon C. Walecka, Esq., LL.M.

Q&A Series is a collection of frequently asked questions that we often hear from clients. It provides brief answers to many common questions about estate planning, Medicaid planning, special needs planning and other elder law issues. Interested in learning more? Search “Q&A”.
Will Medicaid (MassHealth in Massachusetts) look at every check I write?
We are often asked, "Will Medicaid look at every check I write when I'm applying for benefits?" When attempting to answer this question, I first try to educate the client on the basics of Medicaid eligibility and the look-back rules.
What are the long-term (nursing home) Medicaid eligibility rules?
An individual who is living in a skilled nursing facility as a long-term care resident can apply for Long-Term (nursing home) MassHealth benefits to pay for care. In order to qualify for long-term MassHealth, the individual must have less than $2,000 in countable assets. Countable assets are all assets except:
- Home (primary residence worth less than $828,000 in 2016);
- Car (one);
- Prepaid funeral (any amount);
- Burial account (up to $1,500); and
- Life insurance with a face value of $1,500 or less.
If the applicant is married, MassHealth considers the assets of both spouses. The community spouse is currently allowed to keep all of the first $120,900 in countable assets (in 2017). This amount changes almost every year. If there are excess assets, we work with clients to appropriately spend down within the rules. Details on spend down strategies are discussed in
other blog posts.
Regarding income, once approved, the applicant must pay to the nursing home each month an amount known as the “patient paid amount” or “PPA”. The PPA is equal to the applicant’s gross income less:
- $72.80 for personal needs (in 2017);
- Any amount paid for health insurance. For example: the Medicare part B $104.90 premium (in 2016) taken from the social security check and/or the amount paid by the applicant for a Medicare supplemental plan such as Blue Cross/Blue Shield Medex bronze; and
- Any amount the community spouse (the spouse who lives at home) is allowed to keep to meet the Minimum Monthly Maintenance Needs Allowance (MMMNA). The MMMNA is a minimum amount of income the state believes a community spouse needs to live independently in the community. The MMMNA is currently $2,002.50 (in 2017). This amount changes each year.
If the applicant is married, the community spouse is allowed to keep all of his or her own income. If the community spouse’s income is lower than the MMMNA, then the community spouse is allowed to keep some of the applicant’s income. The amount of the applicant’s income that the community spouse can keep is the difference between the MMMNA and the community spouse’s income. Additionally, if the community spouse has high household expenses the community spouse may also be able to keep additional income and/or assets to support himself under certain circumstances.
What is a penalty period for (nursing home) Medicaid eligibility?
In our experience, the average cost of long-term care in a nursing home setting is about $10,000 a month or $120,000 per year. As you can see, this can get expensive quickly. To avoid this cost, many individuals and their families look to qualify for Medicaid to avoid these costs. Generally, in order to qualify of long-term (nursing home) Medicaid, an individual may only have $2,000 in countable assets (as described above). In order to reach $2,000 in assets, an individual may not give away (gift) her assets (with limited exceptions). The Commonwealth imposes a penalty for each dollar you give away during the five years before you apply for Medicaid to pay for nursing home care. A penalty period is a period of time during which Medicaid will not pay for nursing home care because the Medicaid applicant gave something away. The length of the penalty period varies by the value of the gift.
Review of Bank Statements
In response, we sometime hear from a client, "Well, how will they even know I gave something away?" In order to determine whether an individual is eligible for MassHealth, Medicaid scrutinizes every bank transaction you have made in the last five years. When an individual applies for long-term (nursing home) Medicaid, she submits five years worth of bank transactions for all accounts the individual holds. Typically, Medicaid asks for an explanation of all deposits and withdrawals over $1,500. Did you write a check to your son for your share of a vacation he put on his credit card? Did you transfer a large sum of money from one account to another? These are the types of transactions that Medicaid will ask about and you will need to provide an explanation.
This does not mean that you cannot spend your money and live your life, but what it does mean is that if you are looking to qualify for Medicaid some of the larger transactions will need to be explained. This also does not mean that if you purchase an item or service for fair market value that it is not a gift, so long as the item or service was for your benefit. There is no penalty imposed on transfers between spouses.
As you can see, the Medicaid application process can be complicated. Though an attorney is not always needed when filing a Medicaid application, in our experience, it is almost always advisable to consult with a qualified elder law attorney before submitting a Medicaid application. If an application is not done correctly, it may result in denial of vital Medicaid benefits for the senior.
Have you already begun a Medicaid application on behalf of a loved one? Would you like one of our qualified elder law attorneys to review the application or handle an appeal of a denial? Consulting a qualified elder law attorney who can advise you on the entire situation will give you peace of mind. And what you learn may mean significant financial savings or better care for you or your family member in the long run.
The information contained in these blogs is not intended to make you an expert on estate planning nor are these blogs intended to replace the need for the advice of a professional. Rather, these blogs are simply intended to provide a basic understanding of why estate planning is important for everybody and a basic understanding of some of the more common estate planning tools.
©Surprenant & Beneski, P.C. 35 Arnold Street, New Bedford, MA 02740, 336 South Street, Hyannis MA 02601 and 1265 Belmont Street, Suite 2, Brockton, MA 02301. This article is for illustration purposes only. This handout does not constitute legal advice. There is no attorney/client relationship created with Surprenant & Beneski, P.C. by this article. Do Not make decisions based upon information in this handout. Every family is unique and legal advice can only be given after an individual consultation with an elder law attorney. Any decisions made without proper legal advice may cause significant legal and financial problems.
[Last Updated: January 2017]