MassHealth and Massachusetts Long-Term Care Insurance
This chapter covers MassHealth, Massachusetts’s Medicaid program, and the Massachusetts rules for long-term care insurance, including the long-term care policies that qualify for MassHealth exemptions. The previous chapter covered Medicare supplement insurance.
MassHealth (Mass. Gen. Laws ch. 118E, § 9A)
MassHealth is Massachusetts’s program of full or partial medical benefits run under a federal demonstration project (a Section 1115 waiver of the Social Security Act). The Title XIX (Medicaid) rules still apply except where waived (Mass. Gen. Laws ch. 118E, § 9A(1), (7)).
Eligibility (Mass. Gen. Laws ch. 118E, § 9A)
MassHealth may cover people who would otherwise qualify for Medicaid, low-income children, pregnant women and adults, and people who are disabled, blind or chronically ill, with financial eligibility for most categories measured against the federal poverty level (ch. 118E, § 9A(2)). A person who became a Massachusetts resident solely to obtain medical benefits is not eligible (§ 9A(3)). Retroactive eligibility may not be eliminated for applicants over 65, institutionalized applicants, or those hospitalized more than 20 days or in a nursing home more than 30 days (§ 9A(6)).
Benefits (Mass. Gen. Laws ch. 118E, § 9A)
MassHealth medical benefits are health care services, including managed care programs, and include help with premiums and cost sharing and insurance purchased for members (§ 9A(1)). MassHealth may vary the amount, duration and scope of benefits by category, offer different managed care options, and restrict members’ choice of providers (§ 9A(4)). It may charge premiums and copayments on a sliding scale by income, and may waive them for substantial financial or medical hardship (§ 9A(8)). It enrolls members in available employer-sponsored insurance when that insurance meets the criteria for premium assistance and federal approval for reimbursement will be obtained (§ 9A(16)).
A member who also has a Medicare supplement policy may suspend it while on MassHealth (see the chapter on Medicare supplement insurance), and a long-term care policy that meets MassHealth’s standards earns the exemptions described below.
Long-term care (LTC) insurance (211 CMR 65.00)
211 CMR 65.00 applies to long-term care policies offered in Massachusetts after February 25, 2005. Its benefit standards govern individual policies, and its disclosure, marketing and training rules also reach group policies that are not employment-based (211 CMR 65.01, 65.02). Every individual policy must be guaranteed renewable or noncancelable (65.05(4)(a)2.), may have an elimination period of no more than 365 days (the days need not be consecutive), and must provide a lifetime maximum of at least 730 days beyond the elimination period, or a dollar maximum of at least 730 times the highest daily benefit (65.05(2)(a), (b)).
Benefit triggers (211 CMR 65.05(1))
A policy not intended to be federally qualified may not use a benefit trigger more stringent than inability to perform two activities of daily living because of a loss of functional capacity, or severe cognitive impairment. The activities of daily living are eating, toileting, transferring, bathing, dressing and continence. A federally qualified policy follows the Internal Revenue Code (211 CMR 65.05(1)(a); 65.04). Benefits may not depend on prior hospitalization or prior care, or on Medicare eligibility (65.05(1)(b), (c)).
Home health care (211 CMR 65.05(2)(c), 65.06(3))
Home health care means nursing, home health aide, rehabilitative therapy and nutrition counseling services (211 CMR 65.04). A policy that covers it may not require that the insured would otherwise need a skilled nursing facility, first or simultaneously receive care in a hospital or institution, or have an acute condition. Nor may it limit services to RNs and LPNs, require a higher level of licensure than the service needs, or limit benefits to Medicare-certified agencies (65.05(2)(c)1.). Total home health coverage must equal at least one-half of one year’s nursing home benefit under the policy, except for residents of continuing care retirement communities (65.05(2)(c)2.). Every carrier must make available, at application, at least one policy covering home health care that meets these standards (65.06(3)(a)).
Exclusions (211 CMR 65.05(3))
A pre-existing condition is one diagnosed or treated in the 24 months before coverage begins. A pre-existing condition limitation may last no more than six months from the policy’s effective date and must be shown on the front of the policy and the outline (65.04; 65.05(3)(a)). No policy may exclude an otherwise eligible person from policy benefits because of mental or nervous conditions, Alzheimer’s disease, alcoholism or other chemical dependency (65.05(3)(b)), or exclude benefits because a non-Medicare government agency also pays them (65.05(3)(c)). With the Commissioner’s approval, and in a separate section of the policy, a policy may exclude such causes as war, a felony, riot or insurrection, military service, attempted suicide or intentionally self-inflicted injury, alcohol or drug detoxification, non-fare-paying aviation, services payable by Medicare or workers’ compensation, care by the insured’s immediate family, and services normally provided free (65.05(3)(d)).
Massachusetts regulations and required provisions (211 CMR 65.06–65.10)
Standards for marketing (211 CMR 65.08). Each carrier must train its agents on its long-term care products and file a list of those who completed the training (65.08(1)). Marketing must follow 211 CMR 40.00, with auditable procedures and prohibitions against twisting, high-pressure tactics and cold-lead advertising (65.08(2)). An agent must identify which plans are individual and which are group, disclose the carrier the agent represents, and disclose that the agent receives compensation for the sale or replacement (65.08(3)–(5)). An agent may not comment on the legal or tax implications of the purchase without the training, qualification or license to advise on them (65.08(6)). A carrier whose agent violates 211 CMR 65.00 is deemed to have committed an unfair and deceptive act under chapter 176D (65.08(7)).
Suitability of recommended purchase (211 CMR 65.09(4)(b)). If a carrier uses a worksheet or other material to judge whether the applicant is suitable, and then tells the applicant they are, it must give a notice that other considerations may matter, list its suitability standards, and say the applicant should not rely on the statement alone.
Required disclosures and the order of delivery (211 CMR 65.09; 65.100; 65.101):
| Document | Delivered |
|---|---|
| Your Options for Financing Long-Term Care: A Massachusetts Guide | No later than the first face-to-face contact with the agent (direct response: when the application is sent) (65.09(3)(a)) |
| Policy illustration (services covered, benefit limits, elimination period, exclusions, benefit triggers, inflation and nonforfeiture options, premium, and how inflation protection could affect benefits over 20 years) | No later than each proposal or quote (65.09(3)(b); 65.100) |
| Outline of coverage, a document separate from the policy | Before the application is presented (direct response: with the application) (65.09(3)(c); 65.101) |
The policy’s first page must carry the Notice to buyer that the policy may not cover all long-term care costs, a boldface section on pre-existing condition limits, and its renewability status. If the policy does not cover nursing home care, the first page must say so in at least 18-point type or in another manner that sets it apart from the rest of the print (65.09(1)). Policy, application, outline and other disclosures must be in at least 12-point type, and a rider that reduces benefits requires the policyholder’s signed acceptance (65.09(2)). A policy issued on a basis other than that applied for must come with a statement that the coverage originally applied for has not been issued (65.09(4)(a)).
Right to return (211 CMR 65.101). The policy’s free look must be at least 10 days from delivery.
Inflation adjustment and nonforfeiture benefit offers (211 CMR 65.06(1), (2)). At application the carrier must offer an option to increase benefits to offset inflation and an option to buy a nonforfeiture benefit (a benefit if the policy lapses for nonpayment, such as return of premium or a partial paid-up benefit). For each, the carrier must tell the applicant its cost, offer it without additional underwriting, and require the applicant to reject it specifically on the application (65.06(1), (2); 65.04).
MassHealth exemption (130 CMR 515.014; 211 CMR 65.06(4), 65.09). Every carrier must make available, at application, at least one policy that meets the MassHealth exemption standards (211 CMR 65.06(4)). A qualifying policy earns two MassHealth exemptions. In financial eligibility, it affects the treatment of the former home as an asset. In repayment, MassHealth may not recover for nursing facility or other long-term care services from the estate of a member, or through a lien on the member’s home, if the member was institutionalized, told MassHealth they did not intend to return home, and had qualifying long-term care insurance on the date of admission (130 CMR 515.011(B)(1), 515.012(C), 515.014). To qualify, a policy issued on or after March 15, 1999 must meet the individual policy standards of 211 CMR 65.05 and cover nursing and custodial care in a licensed nursing facility, with:
- Benefits of at least $125 per day
- At least 730 days of nursing facility benefits
- An elimination period of no more than 365 days, or a deductible of no more than $54,750
(130 CMR 515.014(A).) The face of every policy must state whether it is or is not intended to be federally tax-qualified and whether it is or is not intended to satisfy the MassHealth exemption standards (211 CMR 65.09(1)(e)3.). If the standards change so that a policy no longer qualifies, the carrier must notify the insured and offer, on a guaranteed issue basis, the benefits needed to qualify again (65.09(4)(c)).
Unintentional lapse (211 CMR 65.10). No long-term care policy may be issued until the applicant has designated at least one other person to receive notice of lapse for nonpayment, or signed a waiver. The carrier reminds the insured of the right to change the designation at least every two years (65.10(1)). A policy may not lapse for nonpayment unless the carrier gives the insured and the designee notice at least 30 days before the lapse, by first-class mail, and the notice may not be given until the premium is 30 days past due. Notice counts as given 10 days after mailing (65.10(2)). If the carrier is given proof that the insured was cognitively impaired or had lost functional capacity before the grace period ended, the policy must be reinstated on request within five months after termination, with past-due premium collected where appropriate (65.10(3)).
For example, a premium due May 1 is unpaid. The lapse notice may not be given before May 31, it counts as given 10 days after it is mailed, and it must be given to both the insured and the designee at least 30 days before the policy lapses.
Lesson summary
- MassHealth is Massachusetts’s Medicaid program, run under a federal waiver. It may vary benefits by category, charge sliding-scale premiums and copayments, and pay premium assistance for employer coverage (ch. 118E, § 9A).
- LTC benefit triggers may be no stricter than two ADLs or severe cognitive impairment; pre-existing limits last at most six months; home health coverage must equal at least half a year of nursing home benefits (211 CMR 65.05).
- LTC delivery order: Your Options for Financing Long-Term Care at the first face-to-face contact, the policy illustration with each quote, the outline of coverage before the application; a 10-day free look (211 CMR 65.09, 65.101).
- Inflation protection and nonforfeiture must be offered without underwriting and, if declined, specifically rejected on the application (211 CMR 65.06).
- A MassHealth-qualifying LTC policy ($125/day, 730 days, elimination period of no more than 365 days) earns exemptions for the former home as an asset and from recovery against the estate or a lien on the home (130 CMR 515.011, 515.012, 515.014).
- To prevent unintentional lapse: a designee for lapse notices, notice at least 30 days before lapse, and reinstatement within five months for cognitive impairment or loss of functional capacity (211 CMR 65.10).