For many Massachusetts families, the family home represents decades of hard work, cherished memories, and financial security. So when people learn that MassHealth — Massachusetts’s Medicaid program — can pursue reimbursement from their home after they pass away, the reaction is understandable: “How do I prevent that from happening?”
It’s an important question, and the answer involves understanding exactly how MassHealth estate recovery works, what changed under the 2024 Long-Term Care Act, and what planning strategies can protect your home while still ensuring you qualify for the benefits you need.
How MassHealth Estate Recovery Works
When MassHealth pays for a member’s long-term care — whether in a nursing home or through home-and-community-based services — federal and state law require the program to seek reimbursement from the member’s estate after their death. This process is called Medicaid estate recovery.
The critical thing to understand is that MassHealth can only recover from assets that are part of your probate estate. Your probate estate is the collection of assets you own in your own name at the time of your death that must go through the court-supervised probate process.
If your home is in your name when you die, it’s part of your probate estate — and MassHealth can seek reimbursement from its value. But if your home has already been removed from your probate estate through proper planning, MassHealth generally cannot recover from it.
What Changed in 2024: The Long-Term Care Act
In September 2024, Governor Maura Healey signed the Long-Term Care Act (Chapter 197 of the Acts of 2024), which included significant changes to MassHealth estate recovery that took effect for members who died after August 1, 2024.
Previously, Massachusetts recovered the cost of all Medicaid-covered services provided to members over age 55 — a scope that was broader than what federal law required. The new law scales the program back to the federal minimum, meaning recovery is now limited to costs of nursing facility services, home-and-community-based services and related hospital and prescription drug services for members 55 and older, and long-term care in a nursing home, ICF/ID, or institution for mental disease for members of any age.
This is a meaningful change. It means that routine MassHealth coverage — doctor visits, prescriptions, outpatient services — is no longer subject to estate recovery for members who died after August 1, 2024. The state also exempted CommonHealth (a buy-in option for working adults with disabilities) and personal care attendant services from recovery.
Additionally, MassHealth will waive estate recovery for all probate estates valued at $25,000 or less. And several hardship waivers — including a residence and financial hardship waiver — are available for qualifying heirs.
While these changes are welcome, estate recovery still applies to the most expensive category of care: nursing home costs. With Massachusetts nursing home costs averaging over $15,000 per month, the potential recovery amount can still be substantial.
Strategy 1: Irrevocable Trust (The “Lockbox” Approach)
The most commonly used strategy for protecting a home from MassHealth estate recovery is transferring it into an irrevocable trust — sometimes referred to as a “Medicaid asset protection trust” or “lockbox trust.”
Once your home is in an irrevocable trust, it is no longer owned by you individually. Because it’s not in your name, it’s not part of your probate estate — and MassHealth cannot recover from assets outside your probate estate.
However, this strategy comes with critical requirements and trade-offs.
The five-year look-back period. MassHealth reviews all asset transfers made within five years of an application for benefits. If you transferred your home to a trust within that window, the transfer will result in a penalty period of ineligibility. The penalty is calculated by dividing the value of the transferred asset by the average daily cost of nursing home care. For a home worth $600,000, this could mean well over a year of ineligibility — during which you’d need to pay for nursing home care out of pocket.
This means timing is everything. The earlier you establish the irrevocable trust, the more protection you have. Waiting until a health crisis hits is often too late.
You give up control. When you transfer your home to an irrevocable trust, you can no longer sell the property, mortgage it, or use it as collateral without the trustee’s involvement. You can typically retain the right to live in the home, but the trust — not you — owns it. This is a significant tradeoff that requires careful consideration.
Capital gains considerations. One advantage of keeping the home in your estate (rather than gifting it outright) is the stepped-up tax basis your heirs receive at your death. A well-drafted irrevocable trust can be structured to preserve the step-up in basis, but this requires specific trust language. Not all trusts accomplish this — which is one reason it’s essential to work with an attorney who understands both elder law and tax law.
Strategy 2: Life Estate Deed
A life estate deed allows you to transfer ownership of your home to your children (or other heirs) while retaining the right to live in the home for your lifetime. You continue to occupy the home, pay taxes and insurance, and maintain it. When you pass away, the property transfers automatically to the remainder beneficiaries — outside of probate.
Because the property passes outside of probate, it’s generally not subject to MassHealth estate recovery. And your heirs typically receive a stepped-up basis for their portion of the property.
However, there are important limitations. A life estate transfer is considered a gift and triggers the five-year look-back, just like a trust transfer. If you need to sell the home during your lifetime, both you (as the life tenant) and your children (as the remainderpersons) must agree — and the sale proceeds are split based on actuarial tables. MassHealth can place a lien on your life estate interest if you’re receiving nursing facility benefits and are not expected to return home. If the property is sold while you’re alive and receiving benefits, MassHealth can collect from the life estate’s actuarial value.
For these reasons, many elder law attorneys prefer the irrevocable trust approach, which offers more flexibility and control.
Strategy 3: Keep the Home Out of the Probate Estate Through Trust Planning
Even if you don’t do Medicaid-specific planning, simply holding your home in a revocable living trust ensures it passes outside of probate. And since MassHealth estate recovery is limited to the probate estate, this alone can provide some protection.
However, it’s important to note that while current law limits recovery to probate assets, there have been legislative discussions about expanding recovery to non-probate assets. If the law changes in the future, a revocable trust alone may not be sufficient. An irrevocable trust provides a more robust layer of protection because the assets are truly no longer yours.
What Won’t Work: Common Myths
Myth: If I give my house to my kids, MassHealth can’t touch it. Transferring your home to your children outright does remove it from your probate estate — eventually. But if the transfer happens within five years of your MassHealth application, you’ll face a penalty period. And as we discuss in our article on whether to add an adult child to your deed, outright transfers create serious tax, creditor, and homestead protection problems.
Myth: MassHealth will take my house while I’m alive. MassHealth generally cannot force the sale of your home while you’re alive — especially if a spouse, disabled child, or certain other family members are living there. The estate recovery process happens after death, through probate.
Myth: If my spouse is still living in the home, MassHealth will take it immediately. MassHealth will defer estate recovery as long as a surviving spouse is alive. Recovery is also deferred when a child under 21, or a blind or disabled child of any age, lives in the home. Several hardship waivers may also apply — including a caregiver child exception for a child who lived in the home and provided care that delayed the parent’s nursing home admission by at least two years.
Myth: I can just put everything in my spouse’s name. Transferring assets entirely to a spouse can create other problems — including the loss of the Massachusetts estate tax exemption for married couples, potential vulnerability to the healthy spouse’s creditors, and an incomplete plan if the healthy spouse becomes ill first.
The MassHealth Home Equity Limit
There’s one more rule to be aware of: if the equity in your home exceeds $1,097,000 (the 2025 Massachusetts limit), the home is treated as a countable asset for MassHealth eligibility purposes. If your home equity exceeds this threshold, you won’t qualify for MassHealth long-term care benefits until the equity is reduced — unless your spouse or certain dependents are living in the home.
This is another reason why early planning is so important, especially in high-value real estate markets like Essex County and the greater Boston area.
Start Planning Early — Before You Need Care
The common thread in all of these strategies is that they work best when implemented well in advance of needing care. The five-year look-back period means that last-minute planning is rarely effective. And the earlier you act, the more options you have.
At The Law Offices of Kimberly Butler Rainen, we help families across Massachusetts develop comprehensive estate plans and elder law strategies that protect the family home while ensuring access to the benefits they need. Whether you’re planning years ahead or facing an urgent situation, we’ll help you understand your options and make the best possible decisions for your family.
Contact us to discuss protecting your home.