There are strict rules limiting the ability of nursing home residents to transfer their assets in order to qualify for MassHealth. Some asset transfers can trigger a period of ineligibility based on the state’s average private-pay cost of nursing home care. In Massachusetts, for instance, the penalty is one month of ineligibility for every $9,300 given away, or one day for every $310. A gift of $93,000 would result in 10 months of ineligibility (plus taxes payable from the estate). If you expect to enter a nursing home in 2017, and you gave $31,000 to a grandchild for college in 2014, you will have a penalty period of 100 days. Those 100 days can easily cost you over $30,000 out of pocket. If you want to transfer assets in order to be eligible for MassHealth, plan to transfer them five years before you expect to need MassHealth.
Many transfers must be reported on an application for benefits. An applicant must report all transfers made within the five years leading up to the application filing date. (The total length of the ineligibility period depends on the amount transferred.)
The upshot is that anyone transferring assets should assume they won’t be eligible for MassHealth for the following five years. That being said, there are certain exceptions that can be helpful. In particular, a transfer of assets to the following people is considered exempt from the transfer penalty:
1. A spouse
2. A blind or disabled child;
3. A trust for the benefit of a blind or disabled child; or
4. A trust for the benefit of a disabled individual under the age of 65.