Nursing home residents and their families have long used pooled disability trusts to shelter funds for their future needs that are not covered by MassHealth. These may include extra therapies or medical care, entertainment, hiring geriatric care managers, or the costs of maintaining a home. The funds can also be used to pay nursing homes for any gaps in coverage by MassHealth that sometimes occur.
These trusts have becoming increasingly important as inflation has pushed up costs, since it's been decades since MassHealth has increased the $2,000 asset limit for eligibility or the $72.80 in income nursing home residents may keep each month to pay for their own expenses. Pooled disability trusts are an important safety hatch for nursing home residents and their caregivers.
These trusts, often referred to by the statute that authorizes them as (d)(4)(C) trusts, require that at least 75 percent of any funds remaining in them upon the death of the beneficiary be paid to MassHealth to reimburse it for its expenses paid out on the beneficiary's behalf. The other 25 percent may stay with the non-profit organization running the trust.
The New Transfer Penalty
Unlike (d)(4)(A) trusts, which are similar and can be created by the individual applying for benefits, there's no age restriction for (d)(4)(C) trusts. In contrast, (d)(4)(A) trusts must be created and funded before the beneficiary turns age 65, even though it can continue after that age. Of course, most nursing home residents are over age 65, so they must take advantage of the (d)(4)(C) trusts.
While there's no question about continuing viability of pooled disability trusts, MassHealth has indicated that it will begin to penalize transfers to them beginning sometime in October. MassHealth promulgated proposed regulations to do so over a year ago, and more recently called the directors of the pooled disability trusts in Massachusetts to let them know the regulations would be going into effect sometime in October. They have also indicated that the new rules will not apply to transfers made before the effective date of the new regulation.
For such a major change, this seems like a rather quiet way to give notice and may violate the Administrative Procedures Act. No doubt it will be challenged, but until and unless overturned by a court, it will be followed by MassHealth workers.
Act Before the New Rule Takes Effect
What this means for seniors and their families is that if they feel it would benefit them to have some funds set aside, they should set up pooled disability trust accounts as soon as possible. We don't know when in October the new rules will take effect, so just in case, family members should move quickly. They may want to do so even if their family member is not in or immediately entering a nursing home. If he or she never applies for MassHealth, there will be some cost to taking this step, but 75 percent of the funds will return to the family if there's no MassHealth reimbursement.
There are five pooled disability trusts in Massachusetts:
- Berkshire County Arc Pooled Trust
- The PLAN of Massachusetts and Rhode Island
- The Arc of Bristol County Pooled Trust
- The Guardian Community Trust
And Call Your Legislator
While MassHealth may not be influenced by a lot of calls from legislators, it also might be. There's a bill in the legislature to bar the imposition of the transfer penalty, but it has little chance of passing before the October imposition of the new rule. Calls from legislative offices to MassHealth may give the agency second thoughts. You can find your legislators' phone numbers here.