To become eligible for MassHealth benefits, an individual (or couple, in the case of a married applicant) ordinarily must possess limited assets. Most of the individual’s or couple’s assets are considered in determining if an applicant|couple’s assets exceed the asset limit, though some exceptions are provided. The most notable exception is the home located in Massachusetts (subject to equity limits). How does the state treat retirement assets?
MassHealth treats IRAs and other retirement assets as follows (130 C.M.R. § 520.007(C)):
Individual Retirement Accounts. Funds in an Individual Retirement Account (IRA) are considered in determining if the value an applicant|couple’s assets exceeds the applicable asset limit, less any withdrawal penalty. Thus, it may be necessary to liquidate an IRA if its value causes an applicant|couple’s assets to exceed the MassHealth asset limit applicable to the applicant|couple.
Keogh Plans. A Keogh Plan is a retirement plan established by a self-employed individual. If a Keogh Plan was established for the self-employed individual alone, the funds in the plan are considered in determining if an applicant|couple’s assets exceed the applicable asset limit, less any withdrawal penalty. Thus, it may be necessary to liquidate a Keogh Plan if its value causes an applicant|couple’s assets to exceed the MassHealth asset limit applicable to the applicant|couple.
Pension Funds. A pension fund is a retirement plan established by an employer to provide benefit payments to employees upon retirement or disability. Pension funds set aside by an individual’s current employer are not considered in determining if an applicant|couple’s assets exceed the applicable asset limit. Pension funds set aside by an individual’s former employer are considered in determining if an applicant|couple’s assets exceed the applicable asset limit (provided liquidation is possible), less any withdrawal penalty. Thus, it may be necessary to liquidate a pension fund if its value causes an applicant|couple’s assets to exceed the MassHealth asset limit applicable to the applicant|couple.
The MassHealth rules applicable to IRA’s and other retirement assets are unfortunate, but an applicant should consult experienced counsel before liquidating assets--to determine the best course of action.