What is a MassHealth (Medicaid) Qualified Policy?

If you receive MassHealth ( Medicaid) have a long-term care insurance policy that meets certain coverage requirements, you might be exempt from some MassHealth eligibility and recovery rules. These rules determine (1) whether your home will need to be sold in order for you to become eligible for MassHealth benefits and (2) whether you or your estate may need to repay MassHealth for any of the long-term care expenses it paid on your behalf.

This section provides only a brief overview of the complex laws that currently govern MassHealth and long-term care. You should seek independent, professional advice before making any decision.

Important Note: You should also be aware that laws may change and the exemptions and the minimum coverage requirements that exist today may not necessarily be the same in the future (or might not exist at all).

Qualifying long-term care insurance policies

Your policy, when purchased, must have a certain level of benefits available to pay for nursing home care as of the day you enter a nursing home and must be in effect and not fully exhausted in order for you to qualify for the MassHealth eligibility and recovery exemptions. When you enter a nursing home, your policy must:

  • Have benefits available sufficient to cover nursing home care for at least 730 days.
  • Have benefits available of at least $125 per day for nursing home care., except where the actual cost is less, regardless of whether the policy counts days or dollars toward the benefit level
  • Not require an elimination period (days that services must be provided before your policy will begin to pay) of more than 365 days, or in lieu of a waiting period, a deductible of more than $54,750.

It should be noted that although a long-term care insurance policy may satisfy the MassHealth minimum coverage requirements at the time it is purchased, if an insured uses the policy to pay for non-nursing home benefits (e.g., home health care, personal care or assisted living benefits), the amount of benefits remaining available to pay for nursing home care may be less than what is necessary to meet the MassHealth minimum coverage requirements. Depending upon the original maximum benefit and other benefits that may have been used, the policy may not meet the MassHealth minimum coverage requirements on the day you enter a nursing home.

For example: you bought a policy with 730 days of nursing home and home health care coverage, and prior to entering the nursing home used 100 days of coverage to pay for home health care services. On the day you enter the nursing home, you would have 630 days of coverage left to pay for nursing home care. This is less than the minimum 730 days of nursing home coverage required for certain MassHealth exemptions.

Therefore, when buying a policy, you should keep in mind that use of non-nursing home benefits may reduce available nursing home benefits below that required to meet the MassHealth minimum coverage requirements.

MassHealth exemptions for which you might qualify

Eligibility Exemption

If a person receives care in a nursing home and MassHealth pays for long-term care expenses, MassHealth may, in some cases, require an applicant's home to be sold in order to be eligible for MassHealth benefits. But if you have a qualifying long-term-care insurance policy, MassHealth will not require you to sell your home.

MassHealth does not require all persons without a qualifying long-term-care insurance policy to sell their homes. Regardless of whether you have a qualifying policy , MassHealth will not require you to sell your home in any of the following situations:

  • You notify MassHealth that you intend to return home.
  • Certain relatives are living there.
  • You own the home jointly with someone else and the other owner is living there.

Recovery Exemption

In some cases, MassHealth will take steps to recover some or all of the costs of MassHealth benefits that you use. But, if you have a qualifying long-term care insurance policy, are institutionalized, and you notify MassHealth that you do not intend on returning home, you may be exempt from the general recovery rules.

MassHealth generally recovers its costs in two situations. First, if MassHealth places a lien against your home, and you sell it during your lifetime, MassHealth will generally recover from your share of the proceeds the cost of all MassHealth benefits provided. Second, if you die and own property, MassHealth will generally file a claim against your estate for the following costs paid by MassHealth:

  1. All MassHealth benefits provided after age 55; and
  2. Any services in a nursing facility or other institution regardless of your age, if you were permanently institutionalized.

If you qualify for the recovery exemption, you will not have to repay the costs of your nursing home stay or other long-term care. You will still be required to repay the costs of other MassHealth services such as hospital care, physician visits and prescriptions.

You should be aware that there are several situations in which MassHealth does not place liens or collect from estates regardless of whether you have long-term care insurance:

  • MassHealth does not place liens on the homes of all persons whose nursing home care is paid by MassHealth. MassHealth does not place a lien if certain relatives are living in the house, and it does not place a lien until it determines that you are unlikely to return home.
  • MassHealth does not collect from the estates of all MassHealth members who die. MassHealth will waive recovery if (1) real property must be sold to pay its claim and (2) the property was left to a person who meets certain financial standards and has continually lived there for a year before you started receiving benefits. However, if during the first two years after MassHealth or a court determines that the conditions for waiver have been met, that person either (a) sells the property, (b) no longer uses the property as his or her primary residence, or (c) no longer meets the financial standards, MassHealth may require payment.
  • If certain relatives survive you, your estate may delay paying MassHealth. No payment will be required while your spouse or any blind or permanently and totally disabled child is still living, or while any of your children is under age 21.
Purchasing insurance to qualify for MassHealth exemptions

Whether you should purchase long-term care insurance to qualify for the MassHealth exemptions is a personal decision. Depending on your financial circumstances, you could decide to purchase sufficient long-term care insurance to cover the full cost of any care you might require, thus eliminating the need for public assistance. You might also have other resources you plan on using to supplement whatever coverage you purchase.

As noted above, if you are considering choosing a policy based on whether it is intended to qualify for MassHealth exemptions, you must also consider that using policy benefits to pay for non-nursing home benefits may reduce policy benefits available for nursing home care below the MassHealth required level when you may enter a nursing home. Depending on your situation, you may choose initial benefit levels to reduce the likelihood of going below the MassHealth minimum.

It is important to remember that long term care insurance products are sold with a variety of features and benefit options. The features and benefit options you choose and how you use them may impact whether or not you have a policy that may qualify you for the MassHealth exemptions at the time you enter a nursing home.

For advice on whether to purchase long-term care insurance for the purpose of qualifying for MassHealth exemptions or for other advice in protecting your assets, you should speak with an attorney or financial planner experienced in estate planning and MassHealth eligibility.

For more information regarding the MassHealth program, call MassHealth's Customer Service Center at 1-800-841-2900 or visit MassHealth's website at www.mass.gov/masshealth

Will Your Health Affect Your Ability to Buy a Policy or to Claim Benefits Later On?

Long-term care insurers usually "medically underwrite" individual coverage. If you are at high risk of needing long-term care services, they will most likely not offer you coverage. The insurance company will look at your health and medical history before deciding whether to issue an individual policy. Although group coverage offered through employers or associations is usually issued without medical screening, insurers may also medically underwrite some of these policies.

Most insurers do thorough underwriting at the time you apply for a policy. They will ask you many health and lifestyle-related questions, examine your medical records and ask your doctor for a statement about your health. If they find that you have a history of health conditions that increase the risk that you will need long-term care, they probably will refuse to sell you a policy. There is no law that requires long-term care insurers to insure people they consider to be at high risk.

Some insurers may do "short-form" underwriting by just asking you a few basic questions on the application form or not checking your medical records until you make a claim. This practice is called " post-claims underwriting" which is prohibited for policies sold in Massachusetts. Insurers that do not thoroughly check your health before selling you a policy may deny your claims later on if they find that you provided incomplete or untrue health information on your application. An insurer may try to refuse to pay you benefits because of information found in your medical record after you file your claim.

If you have any of the following conditions, an application for long-term care insurance will most likely be declined.
AIDS; Alzheimer's Disease;
Amyotrophic Lateral Sclerosis (Lou Gehrig's Disease);
Cystic Fibrosis; Dementia;
Huntington's Disease; Muscular Dystrophy;
Multiple Sclerosis; Organic Brain Syndrome; or
Parkinson's Disease

Please note that each insurance company will have its own medical underwriting guidelines. You should ask your agent or the insurance company any questions regarding health conditions that may cause an application to be declined.

If you find that an insurer may be practicing "post claims underwriting" or may be improperly denying benefits in your policy, you should contact the Division of Insurance at (617) 521-7777.

What If You Have a Pre-Existing Condition?

A long-term care insurance policy usually defines a pre-existing condition as one for which you have received medical advice or treatment or had symptoms within a certain period before you applied for the policy. Insurers may sell policies to people with some pre-existing conditions, but may not pay benefits for services related to that condition for a period of time after the policy goes into effect.

In Massachusetts, individual policies (1) must refer to any pre-existing condition limitations on the front of the policy and outline of coverage and (2) must not exclude coverage for pre-existing conditions for more than 6 months after the date your policy becomes effective. Please be aware that group policies are not subject to the same regulations, and might exclude coverage for pre-existing conditions for longer periods.

How Are Benefits Paid?

Long-term care insurers usually pay benefits on an " expense-incurred" basis. This means that the insurer must decide if you are eligible for benefits and if your claim is for eligible services. If so, the insurer pays benefits either to you or your provider up to the limits in your policy. Your policy will pay benefits only when you actually receive eligible services.

Less common is the " indemnity" method, where the benefit is a set dollar amount. Under this approach, the insurer decides only whether you are eligible for benefits. If you are, the insurer pays benefits directly to you up to the limit of your policy, regardless of the type of services you receive or whether you receive services at all.

What Happens if You Forget or Are Unable to Pay Premiums on Time?

To protect you from losing your coverage if you forget to pay your premium on time, Massachusetts law requires all long-term care insurers to offer you the chance to designate a person you would like your insurer to contact if your payment is overdue. You will be asked to identify a relative, friend or professional (lawyer or accountant, for example), as your third party at the time of application and at least once every two years thereafter. You should take advantage of this important protection. If you choose not to identify a third party, your insurer will ask you to sign a waiver.

If your payment is over 30 days late, your insurer can take steps to cancel your policy by sending written notice to you and to your third party designee that your coverage will end in 30 days if it has not received your payment.

If your policy is cancelled for nonpayment, you have a right to "reinstatement" if, within five months, you provide proof to your insurer that you were mentally or physically impaired before the end of the policy's grace period.

Under What Circumstances Can Your Coverage Be Canceled?

If you pay your premiums on time, there are few circumstances under which your insurer can cancel your coverage. In Massachusetts, all individual long-term care insurance policies are at least guaranteed renewable. Long-term care insurance companies must offer you a chance to renew your coverage and can raise your premium only if approved by the Commissioner of Insurance and if it does so for all policyholders with your plan.

The most common reason for the cancellation of a long-term care policy is that the policyholder has stopped paying the premium because he or she no longer wants or can afford the coverage.

Inaccurate or incomplete information on an application

If you provided incomplete or false information in response to questions about your health status when you applied for coverage, your insurer can rescind (cancel) your policy. It is, therefore, very important that you carefully complete the policy application.

Do not accept an insurance agent's offer to complete the health section of the application for you. Your insurer will give you a copy of your application when the policy is delivered. Review your answers again and report any inaccuracies to the insurer right away.

If, within two years of the application, your insurer discovers that the information you provided is not accurate, it can return your premiums and cancel your policy.

Termination of a group policy

Your coverage under a group policy may be canceled if your employer or group sponsor cancels its relationship with a carrier or if you are no longer a member of the sponsoring group. You may be able to continue your coverage within the group or in a group conversion product depending upon the terms of your policy's renewal section.

If You Already Own a Policy, Should You Switch Plans or Upgrade Existing Coverage?

Before you switch to a new long-term care insurance policy, make sure it is better than the one you have. Please note that this will probably cost you more since you will probably be older than when you first bought the policy. Check to see if you can upgrade the coverage on your current policy if you need additional benefits. It might cost less to improve a policy you have now than to buy a new one. Even if your agent now works for another company, you should think carefully before making any changes.

If you decide to switch to a new long-term care policy, make sure the new company has accepted your application and issued the new policy before you cancel the old one. Otherwise, you could end up with no coverage if the new insurer rejects your application.

Be mindful of the timing of your switch. When you cancel a policy in the middle of its term, many insurers will not refund the premiums you have paid. Also, new restrictions on pre-existing conditions may apply. You may not have coverage for some conditions for a certain period of time.

What are the Responsibilities of Agents Selling Long-Term Care Insurance?

Long-term care insurance can be sold directly by insurance companies by mail or phone solicitation, by agents and brokers who represent one or more insurer, by some estate-planning lawyers or through an employer or other group setting.

Most people who buy long-term care insurance do so through an agent. A responsible, well-trained agent can be an important source of information about the policies that you are considering. Long-term care insurance is a relatively new type of insurance. Even though insurers are required to train their agents, not all agents who are licensed to sell long-term care insurance are equally well-trained and experienced. Ask about the training and experience of any agent with whom you are thinking of working.

Insurers usually pay agents commissions for each policy they sell. The amount of these commissions varies depending on the insurer and the type of policy. An agent might represent only one insurer or might receive a higher commission for selling one policy rather than another. Ask your agent to identify the insurers he or she represents and to explain his or her commission arrangements. This will help you understand whether the agent has an incentive to sell you a particular policy.

Massachusetts requires persons who sell long-term care insurance to:

  • Disclose the fact that they receive compensation in connection with the sale or replacement of all long-term care insurance.
  • Identify the insurer that they are representing in the sale and include the insurer's name on any printed materials that they present.
  • Disclose whether the policy presented is an individual or group policy and, if it is a group policy, identify the group sponsor and any conditions that the consumer must satisfy to join and remain a member of the group.
  • Provide the following materials to potential policyholders on a timely basis: (1) a copy of this guide, "Options for Financing Your Long-Term Care: A Massachusetts Guide" no later than the first personal contact between the potential insured and the agent; (2) a "policy illustration form" outlining the benefits of each policy you are presented no later than the time of the policy quote; and (3) an "outline of coverage" prior to the presentation of the policy's application form.

Massachusetts law prohibits persons who sell long-term care insurance from:

  • Misrepresenting their expertise, qualifications or training to potential clients.
  • Commenting on the legal or tax implications of purchasing long-term care insurance to the extent that they lack the training, qualification or license to provide such advice.
  • Using "high-pressure tactics" (marketing methods that use force, fright, threat or other inappropriate pressure to sell insurance).
  • "Twisting" (making misleading or incomplete comparisons of insurers or policies to convince a policyholder to drop, keep or change in any way his or her current policy or to buy a policy from another insurer).
  • Engaging in "cold-lead advertising" (failing to disclose that the advertising is connected with the sale of insurance and that an agent will be contacting the consumer).

If you believe that an agent or insurer might be violating any of the above marketing rules, you should report the agent to the Division of Insurance or the Attorney General's Office.

How Can You Effectively Work with an Agent, Broker or Financial Planner?

When working with your long-term care insurance agent, broker or financial planner, the most important thing to remember is not to be afraid to ask questions. In particular, be sure to discuss the following:

  • Ask him or her to assist you with comparisons. Compare the policy illustrations, outlines of coverage and disclosures from several companies.
  • Make sure you understand the difference between Medicare and MassHealth (Medicaid), including the limitations of each.
  • Know how any change in policy features affects the premiums. In particular, understand how the different inflation options work and which one is right for you based on your age, health and financial needs.
  • Understand the important differences in policy benefits and prices. Remember that price is always relative; comparing similar plans is not always an easy task.
  • Customize your coverage based on your specific needs. One insurance plan does not fit all situations.

A well-trained and experienced long-term care insurance specialist should ask you questions about your finances, health, family health history, support network and expectations regarding your financial security. Ultimately, the time taken at the outset to understand your needs will help ensure that you get what you need and avoid buying too much coverage.

What Shopping Tips Should You Keep in Mind?

Ask Questions. If you have questions about any agent, insurance company or policy, you can contact the Division of Insurance consumer service help line at (617) 521-7777. You can obtain a list of approved individual long-term care insurance products by contacting this help line or accessing the Division of Insurance website at http://www.mass.gov/doi.

Check With Several Companies and Agents. You should consider contacting several companies (and agents) before you buy. You have a right to ask agents for a "policy illustration form" (see Appendix D) which is a standard form that can be compared with similar forms of other companies. Be sure to compare benefits, the types of facilities or types of care covered, the limits on and exclusions to your coverage and the premium. Remember that policies that have the same coverage and benefits may not cost the same.

Be aware that cheaper today does not necessarily mean cheaper over the lifetime of the policy. Companies may need to raise rates later if premiums collected do not cover expenses. Since you may not be able to switch to a similar policy with another company at a later time, you should look at a company's rate history when considering whether it may be likely to increase premiums in the future. You should also consider the length of time that you may hold a policy and pay premiums before needing any policy benefits.

Take Your Time and Compare Outlines of Coverage. Never let anyone pressure or scare you into making a quick decision. Don't buy a policy the first time you see an agent. Ask for an outline of coverage - it outlines the policy's benefits and points out important features - and compare outlines of coverage for several policies. In Massachusetts, an agent must leave a company's outline of coverage with you when he or she first contacts you about buying a policy.

Take Someone with You When You Meet with an Agent. Two sets of ears are better than one and it helps to have someone you can call besides the agent to remind you of details that are unclear.

Understand the Policy. Learn what the policy covers and what it doesn't. If you have any questions, call the insurance company or a counselor before you buy.

An agent may give you answers that are vague or different from the information in the company literature. You may have questions about the policy. If either happens, tell the agent you will get back to him or her later. Don't hesitate to contact the company to ask questions. Don't trust presentations claiming you have only one chance to buy a policy.

Some companies may sell their policies through the mail, skipping agents entirely. If you buy a policy through the mail, check with the company if you don't understand how the policy works. Talk about the policy with a friend or relative. You may also want to contact the Massachusetts Division of Insurance consumer help line at (617) 521-7777 for information about policies.

Don't be Misled by Advertising. Most celebrity endorsers are paid to advertise. They are not insurance experts. Neither Medicare nor any other federal agency endorses or sells long-term care insurance policies. Be wary of any advertising that suggests the federal government is involved.

Don't trust cards you get in the mail that look as if the federal government sent them. Insurance companies or agents trying to find buyers may have sent them. Be careful if anyone asks you questions over the telephone about Medicare or your insurance. They may sell any information you give to long-term care insurance marketers, who may then contact you by phone, or come to your home to sell you insurance.

Don't Buy More than One Long-Term Care Insurance Policy. You don't have to buy more than one policy to get enough coverage for long-term care. One good policy should be enough. For more information, consider re-reading the section entitled "If You Already Own a Policy, Should You Switch Plans or Upgrade Coverage?" Be sure to discuss any change in your coverage with a qualified advisor.

Be Sure You Accurately Complete Your Application. Don't be misled by long-term care insurance marketers who say your medical history isn't important - it is! Give correct information. If an agent fills out the application for you, don't sign it until you have read it first. Make sure that all of the medical information is correct. If it isn't and the company used that information to decide whether to insure you, it can refuse to pay your claims and even cancel your policy.

Never Pay with Cash. Use a check or money order payable to the insurance company and keep all cancelled checks.

Consider Having the Premium Automatically Withdrawn from Your Bank Account. Automatic withdrawal will prevent you from losing coverage if you forget to pay your premium. If you decide not to renew your policy, be sure to tell the bank to stop the automatic withdrawals. Be sure to check with the insurance company about possible fees if you are considering this option.

Be Sure to Get the Name, Address and Telephone Number of the Agent and Company. Get a local or toll-free telephone number for both the agent and the company.

If You Don't Get Your Policy within 60 Days, Contact the Company or Agent. You have a right to expect prompt delivery of your policy. When you get it, keep it somewhere you can easily find it. Tell a trusted friend or relative where you keep it.

Be Sure You Look at Your Policy during the Free-Look Period. If you decide you don't want the policy soon after you buy it, you can cancel it and get your money back. You must tell the company you don't want the policy within a certain number of days after you get it. The "free-look" period must be noted on the front of the policy. If you want to cancel, keep the envelope the policy was mailed in or ask the agent for a signed delivery receipt when he or she hands you the policy. Send the policy to the insurance company along with a short letter asking for a refund. Send both the policy and the letter by certified mail and keep the mailing receipt. Keep a copy of all letters. Please note that it might take four to six weeks to get your refund.

Read the Policy Again and Make Sure It Gives You the Coverage You Want. Check the policy to see if the benefits are what you expected. If you have any questions, call the agent or company right away. Also, re-read the application you signed. It too is a part of the policy. If it's not filled out correctly, contact the agent or company right away.

Provide Your Spouse or Dependents with a Copy of Your Policy. In the event that you are incapacitated, it is important that those who would be responsible for your care understand what coverage you have through your long-term care insurance.

Check the Financial Stability of the Company You're Thinking About Buying From. Several insurer rating services analyze the financial strength of insurance companies. The ratings can show you how analysts view the financial health of individual insurance companies. Different rating services use different rating scales. Be aware of how the agency labels its highest ratings and the meaning of the ratings for the companies you are considering.

You can get free ratings from some insurer rating services at most public libraries. Or you can call the services directly or access the internet addresses listed below. (Note that calls to a "900" number will mean an extra charge on your telephone bill.)

A.M. Best Company (908) 439-2200 (charged to a credit card) or on the internet at http://www.ambest.com

Duff and Phelps, LLC (212) 450-2800 on the internet at http://www.duffandphelps.com

Fitch Ratings (212) 908-0500 or on the internet at http://www.fitchibca.com

Moody's Investors Services, Inc. (212) 553-1658 or on the internet at http://www.moodys.com

Standard and Poor's Insurance Rating Services (877) 299-2569 on the internet at http://www.standardandpoors.com

Weiss Research Inc. (800) 289-9222 or on the internet at http://www.weissratings.com


Appendix A: Directory of Long-Term Care Resources
Appendix B: Glossary of Common Long-Term Care Expressions
Appendix C: Availability and Cost of Long-Term Care
Appendix D: Long-Term Care Insurance Policy Illustration Form
Appendix E: Accelerated Benefit Riders to Life Insurance Policies
Appendix F: Facts About Your Long-Term Care Insurance Policy