MassHealth imposes a penalty period if you transferred assets within five years of applying for long term care benefits, but what if the transfers had nothing to do with MassHealth eligibility? It is difficult to do, but if you can prove you made the transfers for a purpose other than to qualify for MassHealth, you can avoid a penalty.
You are not supposed to move into a nursing home on Monday, give all your money away on Tuesday, and qualify for MassHealth on Wednesday. So the government looks back five years for any asset transfers, and levies a penalty on people who transferred assets without receiving fair value in return. This penalty is a period of time during which the person transferring the assets will be ineligible for MassHealth. The penalty period is determined by dividing the amount transferred by what MassHealth determines to be the average private pay cost of a nursing home.
The penalty period can seem very unfair to someone who made gifts without thinking about the potential for needing MassHealth. For example, what if you made a gift to your daughter to help her through a hard time? If you unexpectedly fall ill and need MassHealth to pay for long-term care, the state will likely impose a penalty period based on the transfer to your daughter.
To avoid a penalty period, you will need to prove that you made the transfer for a reason other than qualifying for MassHealth. The burden of proof is on the MassHealth applicant and it can be difficult to prove. The following evidence can be used to prove the transfer was not for MassHealth planning purposes:
You are not supposed to move into a nursing home on Monday, give all your money away on Tuesday, and qualify for MassHealth on Wednesday. So the government looks back five years for any asset transfers, and levies a penalty on people who transferred assets without receiving fair value in return. This penalty is a period of time during which the person transferring the assets will be ineligible for MassHealth. The penalty period is determined by dividing the amount transferred by what MassHealth determines to be the average private pay cost of a nursing home.
The penalty period can seem very unfair to someone who made gifts without thinking about the potential for needing MassHealth. For example, what if you made a gift to your daughter to help her through a hard time? If you unexpectedly fall ill and need MassHealth to pay for long-term care, the state will likely impose a penalty period based on the transfer to your daughter.
To avoid a penalty period, you will need to prove that you made the transfer for a reason other than qualifying for MassHealth. The burden of proof is on the MassHealth applicant and it can be difficult to prove. The following evidence can be used to prove the transfer was not for MassHealth planning purposes:
- The MassHealth applicant was in good health at the time of the transfer. It is important to show that the applicant did not anticipate needing long-term care at the time of the gift.
- The applicant has a pattern of giving. For example, the applicant has a history of helping his or her children when they are in need or giving annual gifts to family or charity.
- Demonstrate the intention of the gift. For example, we successfully demonstrated that a $25,000 gift should not trigger a penalty by showing that the memo field of the check stated “congrats on your wedding” and the date of the check was close in time to the wedding of the applicant’s daughter.
- The applicant had plenty of other assets at the time of the gift. An applicant giving away all of his or her money would be evidence that the applicant was anticipating the need for MassHealth.
- The transfer was made for estate planning purposes or on the advice of an accountant.
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