Can my father gift away his house after he starts receiving Medicaid (Masshealth) benefits to pay for his nursing home?

Presumably, you retained an attorney to assist you with the application. Has he or she opined on the matter? Regulations are silent regarding if the transfer will be penalized as far as I can see, though I have only done a quick review. That said, there are permissible transfers of the family home. If you have not consulted with an elder law attorney to date, now would be a good time. My opinion is that if MassHealth has told you that he has been approved and that his LTCI has prevented them from placing a lien on the house, I would lean toward his retaining his interest so that you get a step up in the tax basis following his passing.

It is correct that if an applicant's long term care policy meets the minimum coverage amount and covers two years of the nursing home. Transferring the asset will cause a disqualification period to be applied to your father unless the home is transferred to a care-taker child or a disabled child. The only downside to keeping the house in your father's name is that it will go through the expense of the probate process. The home will receive a step-up in basis upon your father's death. Margaret

If your family came to me with this question, I would suggest that if your father does gift the house, he gifts it into an irrevocable trust. By including a "power of appointment" the property can be returned to him if for some reason he has to re-apply for Masshealth. The irrevocable trust can also be a "grantor" trust for tax purposes - preserving the step-up in basis. The only problem would be arranging for the upkeep of the property while it is in the trust. Is the house in shape to be rented out? It is not good for a house to be unoccupied. Roofs leak. Pipes break. Sometimes a lot of damage happens in an empty house before anyone notices. Like many of these questions, the answer is not "cut-and-dried." You would need to present the whole situation to an elder law attorney - all about the house and all about the family, before a plan could be put together. It would be worth considering, though. Although there are extensive laws and regulations about what happens if you make a gift less than 5 years before you apply for Masshealth, I don't actually know what would happen in this situation, where the gift would be after the approval. That's why I would not suggest doing something that could not be easily undone.

Having had battles with MassHealth that lasted 3-5 years on fairly simple issues, I have come to believe that the lawyers who represent MassHealth lack intellectual integrity. Thus, generally speaking, it's a bad move to try anything "cute" when MassHealth is involved. If there is long-term care insurance that would protect the home under current Massachusetts law, I would follow the clear path provided in the law and not deviate from that path unless there is a very good reason to do so.