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Will Medicaid Count Your IRA or Pension Plan Against You, if You Need Long Term Care? In Massachusetts, the answer is probably "YES."

Under current Medicaid law in Massachusetts, the spouse of a nursing home resident is forced to take any money she has saved in an Individual Retirement Account and buy an annuity, in order to obtain Medicaid nursing home coverage for a spouse.

This treatment of IRA's differs from the full exemption that MassHealth does allow to the spouse if he or she is still working and has saved retirement funds in a plan that is managed by an employer or union. You can see an even more dramatic inequity by comparing Massachusetts with other states on the US map on this page. In some states IRA's and retirement funds for both the community spouse and the nursing home resident are protected by state Medicaid laws. This inequity in the MassHealth application process adds cumbersome financial transactions on top of all of the other difficulties involved in a nursing home admission.

We can advise you and your family on the best ways to preserve retirement saving. There are always alternatives to spending down assets for nursing home care. Read Our Case Summaries for Medicaid Planning After a Nursing Home Admission. Link to Audio Clip Explaining Options. We are also working to support changes to the Massachusetts regulations that would simplify the eligibility process for spouses who have saved retirement. The Massachusetts Chapter of the National Academy of Elder Law Attorneys is asking the Massachusetts legislature to grant more protection to spousal retirement funds. Legislation to Protect the Financial Security of Spouses of Nursing Home Residents SD 1175, HD 2780 is sponsored by Representative Peisch and Senator Eldrige. It would allow the community spouses of nursing home residents to retain their IRA’s by making the IRA account a non-countable asset when their spouse needs Medicaid to cover nursing home care.

This change in the law would save the community spouse of a nursing home reThere are 50 different ways the states treat retirement savings accounts of an elderly people who need nursing home care! Virginia rules on IRA countability New York IRA - Medicaid rules Florida rules for IRA countability Connecticut rules New Jersey Pennsylvania rules Ohio rules Illinois rules Wisconsin sident from having to liquidate the IRA account or transfer it into an annuity investment that may or may not be safe from financial risks.

Medicaid's Long Term Care rules are different in every state. Eligibility for Medicaid nursing home payments depends on 50 different sets of rules, and every state has different rules for retirement savings of elderly people who need nursing home care.

In some states the rules are contained in the state laws. In many other states, the rules are written into the state’s code of agency regulations. In still other states the rules are contained in policy manuals that are written by the state’s Medicaid agency.

Click on the states listed on the map, to read about the wide variations in state Medicaid laws and rules that govern Individual Retirement Accounts and Pension plans.

In states like Florida and New York, the Medicaid rules governing IRA's and pensions vary depending on the county where the Medicaid applicant resides! In some New York Counties, regulations published in 1998 and 1999 say that the retirement funds of an individual Medicaid recipient are not countable as long as he is receiving periodic payments. County regulations published in 2006 remind case workers that the community spouse must be receiving periodic payments from the IRA. I learned about these unique rules several years ago, when it became clear that my father was going to transition from assisted living into nursing home care in New York. Most of his money was in an IRA that he had saved during many years of self employment. My father could qualify for Medicaid in New York State, as long as the annual distributions from his IRA were applied to the cost of his nursing home care. New York State does not require that the IRA be cashed out, or turned into an annuity.

In Massachusetts, it is more difficult for people who have saved for retirement. Under current regulations, MassHealth will always consider an Individual Retirement Arrangement as a "countable asset." Yet, the Massachusetts law does not count retirement money held by the employer of a spouse who is still working. Families and spouses are going through a time of crisis when a loved one is being admitted into a nursing home. Here is how the patchwork of regulations covers people in Massachusetts:

Protected
Partially Protected
Not Protected
Retirement funds held in an employer sponsored pension when the spouse of the person who needs care is still working.
IRA of the retired spouse of the person who needs nursing home care. The spouse can save her pension or IRA from being counted as an asset only if she transforms the pension or IRA into an annuity.
IRA or pension funds owned by the person who needs nursing home care.

Planning for Long Term Care must be part of every estate plan. If you do not have long term care insurance, or sufficient wealth to generate income that will pay for long term care, your potential need for Medicaid coverage must be considered when you plan the ownership and succession of your assets. We carefully consider this potential need for long term care, along with all of the other elements of your estate plan.
Click f Medicaid in Massachusetts Medicare