Court Hands Defeat to MassHealth Attack on Elders Planning for Special Needs Children

Jacques v. Sudders (Massachusetts Superior Court, May 12, 2017)

The Massachusetts Superior Court has preserved an important planning tool for elderly parents of disabled children when the parent is facing the crisis of nursing home care.

The cost of that care can wipe out the parent’s funds, leaving nothing for the special needs child to inherit – which inheritance could be critically important to the child’s well-being. But the elder can’t give his/her assets away without disqualifying the elder from nursing-home Medicaid. Fortunately there are exceptions to that rule. One exception is that the elder can give assets to a Medicaid Payback Trust for the disabled child who is under age 65 without Medicaid penalty, thus preserving those needed funds for the child. [Most of the time a “Medicaid Payback Trust,” more commonly called a “(d)(4)(A) Trust” or “OBRA ’93 Trust,” is funded with the disabled beneficiary’s own funds, not the parent’s funds.]

MassHealth recently tried to stop this practice when it comes to one particular asset: the elder’s home. MassHealth reasoned that one provision of the law permits transfer of assets to the Medicaid Payback Trust, while another provision permits transfer of the home to certain persons, including a disabled child. Since the “home provision” was more specific, MassHealth ruled that the provision permitting transfers of “assets” to a Medicaid Payback Trust did not include the home, which was covered by a different provision.

However, Judge Lang of the Massachusetts Superior Court, in an impeccably reasoned decision, held in Vincenza Jacques v. MaryLou Sudders, Secretary of the Executive Office of Health and Human Services on May 12, 2017 that MassHealth misapplied that canon of statutory construction. The Court, citing well established precedent, held that the more specific statute only overrides the more general statute where they conflict, and here, there was no conflict. Thus, the proper reading is that one statute says that any asset can be transferred to a Medicaid Payback Trust for any disabled beneficiary under 65, while the other allows the transfer of the home to certain individuals.

MassHealth has thirty days to appeal.

Congratulations to our colleague in the Massachusetts Chapter of the National Academy of Elder Law Attorneys, Lisa M. Neeley, for a job well done on the appeal.


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