Massachusetts Budget Proposal
In January, Governor Charlie Baker released his administration’s budget proposal for 2017. Pay close attention to “Outside Section 11”.
“Outside Section 11” proposes changes to significantly expand the scope of estate recovery claims that MassHealth could pursue after the death of residents aged 55 and older who received MassHealth benefits prior to their deaths. These proposed changes would affect all applicants who qualify for MassHealth after July 2016, regardless of any prior estate planning done by applicants or their spouses. Therefore, anyone who has done such planning should closely follow this proposal and plan accordingly.
MassHealth, the Massachusetts name for Medicaid and pays for long term care, to people who qualify. Those aged 55 and older apply for MassHealth either because they require nursing home care or because they need substantial in-home care in order to remain at home and are unable to pay for that care.
Under the current law, MassHealth has a claim against the probate assets of any deceased person who received long term care MassHealth benefits prior to his or her death. However under current law, the agency has no claim against the assets of a MassHealth recipient’s surviving spouse. “Outside Section 11” seeks to change that.
“Outside Section 11” is after those assets that did not pass outside of probate. Under “Outside Section 11”, MassHealth would have a claim against any interest that a deceased MassHealth recipient had at the moment of his or her death in assets that are not subject to the probate process. For example: life estates in real property and joint ownership interests in real estate or other kinds of property, such as bank accounts, stocks, and bonds, as well as annuities, life insurance policies and retirement accounts.
Further, “Outside Section 11” gives MassHealth a claim against the estate of the surviving spouse of the MassHealth recipient, regardless whether the surviving spouse ever received MassHealth benefits or has since remarried or moved outside of Massachusetts.
So much for the tried and true method of gifting the home to the children while retaining a life interest in that home! Under OS 11, the value of such a life estate interest at death would be subject to a MassHealth claim for recovery.
Or consider the technique when a married couple, concerned that one partner may need to qualify for MassHealth, transfers the assets to the healthy spouse. “Outside Section 11” would expose the assets of that healthy spouse, if he or she survives the spouse who received MassHealth, to a MassHealth claim upon the death of the healthy spouse to the extent that those assets were subject to the probate process.
It hasn’t passed yet, but stay tuned.