Elder Law Attorneys Support Legislation
To Preserve Elders Finances
Senior News Staff Report

Hingham - A recent forum on four bills being supported by The National Academy of Elder Law Attorneys, Massachusetts Chapter (NAELA) shed some light on efforts to preserve the financial resources of elders in the Commonwealth and allow them to live independently for as long as possible. NAELA is supporting these four bills in the 2009 – 2010 legislative session and according to the organization, the passage would add little or no cost to the state budget.

Payment to family members for care in the home, an ability for a spouse of someone residing in a nursing home to retain an Individual Retirement Account, allow people to use a long-term care insurance policy before entering a nursing home and not put their home in jeopardy and the use of a money market account rate which should allow a greater amount of assets to be retained by a community spouse

An Act to Help Families Care for Elders proposed by Senator Montigny and Representative Khan would permit seniors to pay privately for a family member to provide personal care or managerial services without later disqualifying the senior for MassHealth long-term care. Currently MassHealth considers a contract for family care to be a disqualifying transfer of assets for less than fair market value. This legislation would help maintain an individual at home and make it financially possible for the family member to provide care. It requires that the contract services must be reasonably priced and necessary to divert or delay placement in assisted living or a nursing home. In an economic climate that makes it impractical for a family member to quit a job to take care of an ailing parent, this legislation would make that possible.

“Payments to family members who provide care are currently being deemed disqualifying transfers in the long-term care MassHealth application process,” said Attorney Judith M. Flynn of the Elder Law Office of Judith M. Flynn with offices in Hingham and Mansfield. “The Division of Medical Assistance (DMA) has taken the position that providing care is a moral obligation, so they deem any payments to family members as “gifts” despite the costs to the family member of providing the care.”

“In many cases family members have left their jobs to provide full-time care to mom or dad, or they use their sick time and vacation time and have to take unpaid time off, and they have their own families to support,” said Flynn. “This bill would require the DMA to recognize the true value of the services provided by family members and allow elders to stay in the community longer with the help of their loved ones.”

An Act Regarding the Assets of Medical Assistance Recipients proposed by Senator Eldridge and Representative Peisch will help community spouses of nursing home residents retain their Individual Retirement Accounts (IRA’s) by making them non-countable assets when the resident applies for MassHealth. This change in the law will permit a community spouse of a nursing home resident to retain an IRA account from which they can receive distributions. Currently, if the spouse has an IRA account they may in some cases be required to liquidate them which results in a significant financial penalty. During this time of economic uncertainty, the spouses of nursing home residents need these accounts to allow them to live independently and with dignity.

“Under the present regulations, the institutional spouse’s assets must be reduced below $2,000, but inter-spousal transfers are allowed,” explained Flynn. “In order to transfer IRA funds to the community spouse, however, there are often significant tax consequences resulting from liquidating the account in order to facilitate the transfer. This bill would address this issue and make some level of IRA funds non-countable in the long-term care MassHealth application process.”

An Act Relative to Nursing Facility Long Term Care Claims sponsored by Senator O’Leary, Senator Chandler and Representative Fallon addresses current MassHealth regulations to allow elderly nursing home residents to exempt assets from MassHealth estate recovery if they purchase long-term care insurance which meets state standards. Many elders have purchased long-term care insurance thinking that they will qualify for the asset recovery exemption because their policies meet these minimal standards. What they may not know is that use of their policies to pay for community-based care prior to entering a nursing home may disqualify them from the estate recovery exemption.

This bill allows seniors who buy long term care insurance to use that insurance to pay for community-based care before they enter a nursing home without disqualifying them from the MassHealth estate recovery exemption. Allowing seniors to use their long term care insurance for community-based care will enable more elders to remain in their homes rather than forcing them into institutional care.

“The present regulations for long-term care MassHealth benefits make the home a non-countable asset, also called lien-buster protection, for an individual who has purchased a long-term care insurance policy with minimum coverage of $125 per day for two years, or some lesser amount which complied with the regulations at the time purchased,” said Flynn. “The problem is that if an elder used his or her policy benefits to obtain in-home care and has less than the minimum coverage remaining at the time they enter the nursing home, they will lose the lien-buster protection. This Bill would allow people to use their long-term care insurance benefits to remain in the community as long as possible without losing the lien-buster protection when they do transition to nursing home care.”

An Act To Correct Income Calculations For Spouses Of Nursing Home Residents proposed by Senator Candaras and Representative Fernandes would address current MassHealth rules that a community spouse of a nursing home resident is entitled to a portion of marital income for her support. This income is generated in part from any assets which the spouse retains and is calculated by use of a proxy rate of return on assets. This proxy rate of return is greater than that realized by most seniors, who generally use short term instruments such as money market accounts. The use of unrealistically high rates of return overestimates the interest income actually received by the spouse and results in an income allowance which does not meet their needs.

“This Bill will require MassHealth to use a money market rate of interest to calculate the spouse’s income allowance, which will result in the community spouse being able to retain a greater level of assets for his or her future security,” said Flynn.

These bills are also supported by the Mass Home Care Association, Mass Senior Action Council and the Massachusetts Association of Older Americans. For more information about these bills contact Deborah Thomson at The PASS Group at (617) 227-6985.