Category Archives: Annuities

Preserving Assets and Maximum Income for the Community Spouse When the Institutionalized Spouse Enters a Nursing Home

January 1, 2022 – 12:01 am

by: Brian E. Barreira, Esq.

When one spouse enters a nursing home and may be applying for MassHealth, the spouse who remains at home or in assisted living often has some important choices to make with an unbiased legal advisor.

One of the biggest mistakes that many spouses make when the other spouse enters a nursing home is not getting legal advice from an elder law attorney about Medicaid, known in Massachusetts as “MassHealth.” The “free” information that many community spouses (which under MassHealth law  means any spouse who is not in a nursing home) often rely on can turn out to be quite costly to them.

There are different layers in MassHealth law, and many persons only seem to know about the bottom layer, so let’s go over that one first. Under 2022 law, just about everything other than the home and car are totaled, and the community spouse supposedly can keep only the first $137,400.00.

Unfortunately, this lower layer is where the knowledge of many persons ends, and two other upper layers of the law effectively override the lower layer. One upper layer is that the community spouse can enter into certain types of annuity agreements with the spenddown (that is, excess) assets.

Before even thinking about using the annuity layer, however, the community spouse should keep three things in mind: (A) not every annuity will work; (B) the published regulations and unpublished internal procedures and policies which now allow such a move can change with little advance notice, so it is often not advisable that an annuity be purchased until the institutionalized spouse’s nursing home stay has already occurred; and most importantly (C) some community spouses can keep everything without needing an annuity, and are better off without an annuity, due to the other upper layer of MassHealth law that protects income for the community spouse.

At present, the community spouse has the absolute right to an income of at least 2,177.50 per month. This is known as the Minimum Monthly Maintenance Needs Allowance (“MMMNA”). If shelter expenses exceed 30% of this figure, or $653.25, or if a disabled child lives at home, the community spouse is often entitled to keep a higher MMMNA. If the Social Security and pension payable in the name of the community spouse is less than the $2,177.50 figure, at the end of the MassHealth application process the community spouse is allowed to keep some or all of the institutionalized spouse’s income to be brought up to the MMMNA.

If the needs of the community spouse are greater than $3,435.00 per month, a higher amount of income can sometimes be preserved for the community spouse via the fair hearing appeal process, where the need to keep the other assets has to be proved to maintain the financial ability to remain in the community.  A common situation where need can be fairly easily proved is where the community spouse is living in an assisted living facility and needs to be there due to frailty, medical condition or other special needs.   Once the need to be in assisted living is established, the appeal is primarily about numbers and prevailing interest rates, so the elder law attorney can often handle it alone without the community spouse having to go to the hearing.

Another option to retain greater income for the community spouse is a Probate Court procedure known as separate support.  Since both spouses need legal representation in court, it is important that the institutionalized spouse have a durable power of attorney that allows the appointed agent or attorney-in-fact to hire a lawyer.

When spenddown and appeal options are determined by an elder law attorney as potentially unsuccessful, the community spouse can often purchase certain types of immediate annuities, where the assets used to make the purchase then change character and are treated as the community spouse’s protected income.

One other option available to the community spouse, but not often done in Massachusetts, is known as spousal refusal, where the community spouse refuses to cooperate in the application and payment processes.

By Brian E. Barreira | Also posted in MassHealth Application Process, Preserving Assets & Income for the Spouse | Tagged , , , , , , , | Comments (0)

Minimum Monthly Maintenance Needs Allowance for Nursing Home Resident’s Spouse Is Now $2,002.50 until 6/30/2017

July 1, 2016 – 12:27 am

by: Brian E. Barreira, Esq.

When one spouse is living in a nursing home and the other spouse is living anywhere else, the spouse who is not living in the nursing home (who is known under federal Medicaid law as the “community spouse”) is allowed by MassHealth to keep some (or sometimes all) of the nursing home resident’s income through an income allowance known as the Minimum Monthly Maintenance Needs Allowance (MMMNA).  Every July 1st, this figure changes based on federal poverty level guidelines.  The MMMNA has now been increased to $2,002.50, effective July 1, 2016 and continuing through June 30, 2017.  (This MMMNA figure is the same in 48 states; Alaska and Hawaii have higher figures.)

The income calculation  for the community spouse does not end there.  If certain basic household expenses are more than 30% of the MMMNA, which is $600.75, the community spouse is entitled to keep an extra amount of the couple’s income.  This extra income is known as the Excess Shelter Amount (“ESA”).  Between the MMMNA and the ESA, the community spouse can now be entitled to as keep as much as $2,980.50 of the married couple’s total income.  If even more income is needed, such as where the community spouse is living in an assisted living facility, the community spouse can request a fair hearing and attempt to prove the need for more than $2,980.50 of the married couple’s total income.  In some cases, the community spouse would need more than $2,980.50 due to the costs of an assisted living facility, but would be required at the fair hearing to prove the need to live there.

Utilizing the MMMNA provisions in Medicaid/MassHealth law is always better than purchasing an immediate annuity with excess assets, since all payments from the annuity are treated as income, and taking that step ends up reducing the amount of the married couple’s income that the community spouse could otherwise keep.  Unfortunately, due to the asset rules under Medicaid/MassHealth, in many situations the community spouse has no choice but to purchase an immediate annuity with excess assets.

 

By Brian E. Barreira | Also posted in Fair Hearings, MassHealth Application Process, Preserving Assets & Income for the Spouse | Comments (0)

Minimum Monthly Maintenance Needs Allowance for Nursing Home Resident’s Spouse Is Now $1,991.25 until 6/30/2016

November 5, 2015 – 6:26 pm

by: Brian E. Barreira, Esq.

When one spouse is living in a nursing home and the other spouse is living anywhere else, the spouse who is not living in the nursing home (who is known under MassHealth law as the “community spouse”) is allowed by MassHealth to keep some (or sometimes all) of the nursing home resident’s income through an income allowance known as the Minimum Monthly Maintenance Needs Allowance (MMMNA).  Every July 1st, this figure changes based on federal poverty level guidelines.  The MMMNA is $1,991.25 from July 1, 2015 through June 30, 2016.

If certain basic household expenses are more than 30% of the MMMNA, which amounts to $597.38, the community spouse is entitled to keep extra income, known as the Excess Shelter Amount (“ESA”).  Between the MMMNA and the ESA, the community spouse can now be entitled to as keep as much as $2,980.50 of the married couple’s total income.  If even more income is needed, such as where the community spouse is living in an assisted living facility, the community spouse can request a fair hearing and attempt to prove the need for more than $2,980.50 of the married couple’s total income.  In some cases, the community spouse would need more than $2,980.50 due to the costs of an assisted living facility, but would be required at the fair hearing to prove the need to live there.

Utilizing the MMMNA provisions in Medicaid/MassHealth law is always better than purchasing an immediate annuity, since all payments from the annuity are treated as income, and purchasing an annuity ends up reducing the amount of the married couple’s retirement income that the community spouse could otherwise keep.  Unfortunately, due to the asset rules under Medicaid/MassHealth, in many situations the community spouse has no realistic choice but to purchase an immediate annuity with excess assets.

By Brian E. Barreira | Also posted in Fair Hearings, MassHealth Application Process, Preserving Assets & Income for the Spouse | Tagged , , , , , , , , , | Comments (0)

Minimum Monthly Maintenance Needs Allowance for Nursing Home Resident’s Spouse Is Now $1,966.25 until 6/30/2015

August 27, 2014 – 8:50 pm

by: Brian E. Barreira, Esq.

When one spouse is living in a nursing home and the other spouse is living anywhere else, the spouse who is not living in the nursing home (who is known under MassHealth law as the “community spouse”) is allowed by MassHealth to keep some (or sometimes all) of the nursing home resident’s income through an income allowance known as the Minimum Monthly Maintenance Needs Allowance (MMMNA).  Every July 1st, this figure changes based on federal poverty level guidelines.  The MMMNA was $1,939 from July 1, 2013 until June 30, 2014, and has been increased to $1,966.25 from July 1, 2014 through June 30, 2015.

If certain basic household expenses are more than 30% of the MMMNA, which amounts to $589.66, the community spouse is entitled to keep extra income, known as the Excess Shelter Amount (“ESA”).  Between the MMMNA and the ESA, the community spouse can now be entitled to as keep as much as $2,931.00 of the married couple’s total income.  If even more income is needed, such as where the community spouse is living in an assisted living facility, the community spouse can request a fair hearing and attempt to prove the need for more than $2,931.00 of the married couple’s total income.  In some cases, the community spouse would need more than $2,931.00 due to the costs of an assisted living facility, but would be required at the fair hearing to prove the need to live there.

Utilizing the MMMNA provisions in Medicaid/MassHealth law is always better than purchasing an immediate annuity, since all payments from the annuity are treated as income, and taking that step ends up reducing the amount of the married couple’s retirement income that the community spouse could otherwise keep.  Unfortunately, due to the asset rules under Medicaid/MassHealth, in many situations the community spouse has no choice but to purchase an immediate annuity with excess assets. See Protecting Assets and Maximum Income in 2014 When Applying for MassHealth to Help Pay for the Unhealthy Spouse’s Nursing Home Bills.

 

By Brian E. Barreira | Also posted in Fair Hearings, MassHealth Application Process, Preserving Assets & Income for the Spouse | Comments (0)

Should You Get a Second Opinion Before Buying Annuities?

October 1, 2013 – 11:32 am

by: Brian E. Barreira, Esq.

Many of my clients have been sold annuities that they thought helped their financial situation if nursing home care was needed in the future. Unfortunately, very few annuities help the situation, and some of them turn out to be financially disastrous. My opinions about the overannuitization of older persons in Massachusetts can be found on another blog of mine in the following posts:

Is It a Good Idea for an Elderly Person to Purchase a Deferred Annuity?

Is a Deferred Annuity Helpful from a Medicaid or MassHealth Standpoint?

You should take special caution whenever you walk into a bank, where they seem to be especially clueless (or commission-driven; make sure you ask how much the salesperson is making on the sale), so see the following posts:

Should You Buy a Deferred Annuity at a Bank?

Should You Ever Buy an Immediate Annuity at a Bank?

 

By Brian E. Barreira | Also posted in MassHealth Application Process, Preserving Assets & Income for the Spouse | Tagged , , , | Comments (1)

Minimum Monthly Maintenance Needs Allowance for Nursing Home Resident’s Spouse Is Now $1,939 until 6/30/2014

July 5, 2013 – 9:17 pm

by: Brian E. Barreira, Esq.

When one spouse is living in a nursing home and the other spouse is living anywhere else, the spouse who is not living in the nursing home (who is known under MassHealth law as the “community spouse”) is allowed by MassHealth to keep some (or sometimes all) of the nursing home resident’s income through an income allowance known as the Minimum Monthly Maintenance Needs Allowance (MMMNA).  Every July 1st, this figure changes based on federal poverty level guidelines.  The MMMNA was $1,891 from July 1, 2012 until June 30, 2013, and it will increase from $1,891 to $1,939 from July 1, 2013 through June 30, 2014.

If certain basic household expenses are more than 30% of the MMMNA, which amounts to $582, the community spouse is entitled to keep extra income, known as the Excess Shelter Amount (“ESA”).  Between the MMMNA and the ESA, the community spouse can now be entitled to as keep as much as $2,898 of the married couple’s total income.  If even more income is needed, such as where the community spouse is living in an assisted living facility, the community spouse can request a fair hearing and attempt to prove the need for more than $2,898 of the married couple’s total income.

Utilizing the MMMNA provisions in Medicaid/MassHealth law is always better than purchasing an immediate annuity, since all payments from the annuity are treated as income, and taking that step ends up reducing the amount of the married couple’s retirement income that the community spouse could otherwise keep.  Unfortunately, due to the asset rules under Medicaid/MassHealth, in many situations the community spouse has no choice but to purchase an immediate annuity with excess assets.  See Protecting Assets and Maximum Income for the Community Spouse When Applying for MassHealth in 2013 to Help Pay for the Unhealthy Spouse’s Nursing Home Bills in Massachusetts.

By Brian E. Barreira | Also posted in Fair Hearings, MassHealth Application Process, Preserving Assets & Income for the Spouse | Comments (1)

Preserving Assets and Maximum Income for the Healthier Spouse When the Other Spouse Enters a Nursing Home

January 26, 2011 – 9:32 pm

by: Brian E. Barreira, Esq.

When one spouse enters a nursing home and may be applying for MassHealth, the spouse who remains at home or in assisted living often has some important choices to make with an unbiased legal advisor.

One of the biggest mistakes that many spouses make when the other spouse enters a nursing home is not getting legal advice from an elder law attorney about Medicaid, known in Massachusetts as “MassHealth.” The “free” information that many community spouses (which under MassHealth law  means any spouse who is not in a nursing home) often rely on can turn out to be quite costly to them.

There are different layers in MassHealth law, and many persons only seem to know about the bottom layer, so let’s go over that one first. Under 2010 law, just about everything other than the home and car are totaled, and the community spouse supposedly can keep only the first $109,560 under 2011 law.

Unfortunately, this lower layer is where the knowledge of many persons ends, and two other upper layers of the law effectively override the lower layer. One upper layer is that the community spouse can enter into certain types of annuity agreements with the spenddown (that is, excess) assets.

Before even thinking about using the annuity layer, however, the community spouse should keep three things in mind: (A) not every annuity will work; (B) the published regulations and unpublished internal procedures and policies which now allow such a move can change with little advance notice, so it is often not advisable that an annuity be purchased until the institutionalized spouse’s nursing home stay has already occurred; and most importantly (C) many community spouses can keep everything without needing an annuity, and are better off without an annuity, due to the other upper layer of MassHealth law that protects income for the community spouse.

At present, the community spouse has the absolute right to an income of at least 1,821.25 per month. (Further, if shelter expenses exceed 30% of this figure, or $514.00, or if a disabled child lives at home, the community spouse is often entitled to keep much more than $1,821.25 per month.) If the Social Security and pension payable in the name of the community spouse is less than the $1821.25 figure, as is often the situation when the husband enters the nursing home, at the end of the MassHealth application process the community spouse is allowed to keep some or all of the institutionalized spouse’s income.

If the needs of the community spouse are greater than $2,739 per month, a higher amount of income can sometimes be preserved for the community spouse via the fair hearing appeal process, where the need to keep the other assets has to be proved to maintain the financial ability to remain in the community.  A common situation where need can be fairly easily proved is where the community spouse is living in an assisted living facility and needs to be there due to frailty, medical condition of other special needs.   Once the need to be in assisted living is established, the appeal is primarily about numbers and prevailing interest rates, so the community spouse need not go to the hearing, and the elder law attorney can often handle it alone.

Another option to retain greater income for the community spouse is a Probate Court procedure known as separate support.  Since both spouses need legal representation in court, it is important that the institutionalized spouse have a durable power of attorney that allows the appointed person to hire a lawyer.

When spenddown and appeal options are determined by an elder law attorney as potentially unsuccessful, the community spouse can often purchase certain types of immediate annuities, which are almost always the last resort due to the manner in which the institutionalized spouse’s income is treated for MassHealth purposes.

Maintaining the maximum retroactivity of the original MassHealth application is vital to preserve assets for the community spouse and to ensure that the nursing home will be paid by MassHealth, so the MassHealth fair hearing appeal process should never be overlooked if any type of notice of denial is ever received along the way.

Why don’t more persons know about the appeal and annuity options? Perhaps because the high-level state bureaucrats who run MassHealth do not want everyone taking advantage of these options, and have seen to it that their legal department keeps the official information about spousal rights and annuities as vague or hidden as is legally possible.  Perhaps because many nursing homes offer “free help” with the MassHealth application, yet do not give the family complete information about possible appeals and annuities, so that the community spouse feels relieved at receiving help yet unaware that some important alternatives are not being explored.

By Brian E. Barreira | Also posted in MassHealth Application Process, Preserving Assets & Income for the Spouse | Tagged , , , , , , , | Comments (0)

Last-Minute Medicaid Planning in Massachusetts

January 11, 2011 – 9:24 pm

by: Brian E. Barreira, Esq.

Even After a Nursing Home Stay Has Begun, Some Asset Protection Planning Can Still Be Done

Lookback and Disqualification Periods

Many persons, including some who are rendering advice about Medicaid law, seem to misunderstand the Medicaid lookback period. The lookback period is not the same as the disqualification period. When a Medicaid application is filed, the state Medicaid agency looks back five (5) years for gifts made and trusts established on or after February 8, 2006. Based on whatever the state Medicaid agency finds in the lookback period, a disqualification period can be imposed.

A thorough understanding of the interaction between the lookback and disqualification periods is needed before deciding whether a gift can be made, or whether the filing of a Medicaid application should be delayed.

Last-Minute MassHealth (i.e., Medicaid) Planning for Married Couples

The community spouse (A) can keep all assets automatically in some cases; (B) can spenddown excess assets in some cases; and (C) can keep all assets in many other cases through a fair hearing process. All protected assets must be transferred into the community spouse’s name, and the 5-year lookback period does not apply to this allowable transfer of assets.

When all else is determined by an elder law attorney as potentially unsuccessful, the community spouse can purchase an immediate annuity, which is similar to buying a short-term pension.  There is no current regulation requiring that the annuity extend for the community spouse’s life expectancy or that the institutionalized spouse be the post-death beneficiary.

To allow extra items to be bought for the institutionalized spouse without causing the loss of MassHealth benefits that an outright inheritance would cause, after the gifts are made to the community spouse, the community spouse should often execute a will containing a testamentary trust for the institutionalized spouse’s benefit.

Last-Minute MassHealth (i.e., Medicaid) Planning for an Unmarried Person

Long-term care insurance protects the home from a MassHealth estate recovery claim for long-term care (but not community care) benefits if questions on the application are answered correctly.

Partial gifts of real estate and other assets can still be advisable, even after a nursing home stay has begun, if sufficient assets are retained to pay for the disqualification period caused by the gifts, or the remainder of the lookback period.

For a person whose realistic life expectancy is far less than average, an immediate annuity may, even under the 2006 law, be a way to minimize nursing home payments and preserve funds for the eventual post-death beneficiary of the annuity.

By Brian E. Barreira | Also posted in Gifts & Disqualifying Transfers, Long-Term Care Insurance, MassHealth Application Process, Permissible Transfers, Preserving Assets & Income for the Spouse, Protecting the Home | Tagged , , , , | Comments (0)

Five Issues in Massachusetts Medicaid Planning

December 11, 2010 – 8:40 am

by: Brian E. Barreira, Esq.

Most Living Trusts Sold at Seminars Don’t Work for MassHealth Purposes

Often overlooked in the estate tax planning process is that a funded trust that avoids probate is often considered available by MassHealth (i.e., Medicaid) to pay for the surviving spouse’s nursing home care. Thus, funding a revocable trust for the sole purpose of avoiding probate can place a surviving spouse in a worse position than if probate avoidance had not been accomplished.

Testamentary Trusts
There is one type of trust that spouses can establish for each other that meets the criteria established under both federal law and Massachusetts regulations for being considered unavailable to a MassHealth applicant: a discretionary testamentary trust. Under a federal Medicaid law that has been in effect since 1985, an unfunded trust that was funded by the deceased spouse’s will is not considered available for payment of the nursing home care of the surviving spouse to the extent that distributions are discretionary.

Irrevocable Trusts Also Allow Capital Gains Tax Planning

Irrevocable trusts are subject to a 5-year lookback period, and can sometimes place an elderly person in a worse position when applying for MassHealth than other types of gifts. Since an irrevocable trust is effective only if its principal cannot be distributed to the person who established it, attempting to preserve the use of the principal to pay for home care or assisted living is not possible. An irrevocable trust can be drafted, however, to allow principal distributions from the trust to others who can opt to pay for the home care or assisted living. If the irrevocable trust triggers the grantor trust rules as to the trust principal, such as by the reservation of a special power of appointment, the grantor can maintain use of the $250,000.00 capital gains exclusion upon a sale by the trust.

Long-Term Care Insurance Policies Can Preserve the Home

If a person ever received any type of MassHealth benefits, a post-death estate recovery claim for reimbursement can be made against the person’s probate estate. Under current MassHealth regulations, a 2-year, $125.00 per day long-term care insurance policy can exempt the home from post-death estate recovery for MassHealth long-term care (but not community care) benefits. This regulation replaced the prior requirement of $50.00 per day, which was grandfathered for individual long-term care insurance policies issued before March 15, 1999.

Immediate Annuities As a Last-Minute Option for the At-Home Spouse

The purchase of an immediate annuity can place a community spouse in a worse financial position than going through the MassHealth appeal process. In cases where the MassHealth appeal process would not preserve all assets, an immediate annuity can help, but the MassHealth appeal process is financially preferable because it can preserve not only all assets but also some or all of the institutionalized spouse’s income for the benefit of the community spouse. The payout period of the annuity cannot exceed MassHealth’s determination of the life expectancy of the community spouse. Under the immediate annuity route, however, MassHealth eligibility is not effective until the date the annuity is irrevocably purchased, so it is important that a qualified elder law attorney make a determination of which is the better route as early in the planning process as possible.

By Brian E. Barreira | Also posted in Irrevocable Trusts, Long-Term Care Insurance, Preserving Assets & Income for the Spouse, Protecting the Home, Revocable Trusts, Tax Issues, Testamentary Trusts | Tagged , , , , | Comments (1)