Is your mother or father, or someone close to you, confined to a nursing home? Do you think he or she has too many assets to qualify for MassHealth? Think again. Elderly Massachusetts nursing home residents can qualify for MassHealth after they have transferred their excess assets (those over $2,000) to a qualified special needs pooled trust, commonly called a “d4c pooled trust” after the federal code section that allows this type of trust. A pooled trust is run by a non-profit organization that provides planning and trust management services to disabled individuals or those with special needs. The non-profit pools and invests the money it is holding and uses the funds for the benefit of the people who have deposited the funds with the trust.
In Massachusetts, a transfer to a pooled trust is not subject to the 5-year look-back period limiting the transfer or gifts of assets to others. An elderly or disabled person can transfer money to a pooled trust one day and apply for MassHealth the next. This is a great planning option, whether your relative needing nursing home care has only limited assets or lots of them. For example, your elderly mother who has $50,000 in assets can transfer her funds to the pooled trust, immediately qualify for MassHealth, and know that these funds can be used to supplement her care and enhance the quality of her life. The trust could provide her with funds to purchase a better TV or radio or a more expensive wheelchair, while MassHealth pays the nursing home bill.
But what if your mother has $300,000? A client of mine had in this amount in savings when she talked to me about three years ago. She was a single, retired schoolteacher who had saved her money all her life, was 96, and had dementia that left her needing nursing home care. The nursing home cost about $12,000 per month. Her monthly pension was $4,000, so the “burn rate” of her savings was about $8,000 per month. (The burn rate is how quickly you will deplete your savings by paying the nursing home expenses.)
On my advice, my client transferred her money to a qualified Massachusetts pooled trust and then immediately qualified for MassHealth.
My client’s niece met with me last week. My client had recently died, at 99. She had been on MassHealth for three years. During that time, the pooled trust had provided her with new clothes, better furniture, an occasional catered meal, and a much better wheelchair, among other things, that in total cost about $30,000. During those three years, the pooled trust money had also been invested by the trust, so there was still about $300,000 in my client’s account when she died.
The pooled trust agreement provided that 20% of the funds remaining at my client’s death would be retained by the pooled trust to help it fulfill its non-profit mission of caring for the elderly and disabled, leaving $240,000. Under the MassHealth rules for pooled trusts, MassHealth had a claim against these funds for reimbursement of the benefits paid by MasasHealth on my client’s behalf. However, once my client had qualified for MassHealth, the monthly nursing home bill was reduced from the $12,000 private-pay rate to the $7,000 MassHealth rate. Since my client had continued to pay her $4,000 monthly pension to the nursing home, the total MassHealth expenditure was only $3,000 ($7,000 less $4,000). Over three years, the amount paid by MassHealth was $108,000, instead of $288,000 that would have been paid at the $8,000 private-pay burn rate. At the end of the day, my client had received $30,000 to use for extras during her life, and MassHealth was repaid in full, leaving about $132,000 for distribution to the people my client cared about, a much better result than private paying and leaving little or no assets to leave to her family.
If someone you know and love is in a similar situation, you should learn more about pooled trusts in Massachusetts. You can google “pooled trust” to learn more in general or for a specific pooled trust that I have worked with, visit the PLAN of Massachusetts and Rhode Island website. If you have had good or bad experiences with a particular pooled trust, I would like to hear about it. If you are willing to share your experience with me, email me at email@example.com. Also, to learn more about pooled trusts and other topics that might be of interest to elders, check out my YouTube channel, “ElderLawFrankandMary”.